BUSINESS BEFORE QUESTIONS

City of London (Various Powers) Bill [Lords] (By Order)

Second Reading opposed and deferred until Tuesday 13 November (Standing Order No. 20).

ORAL ANSWERS TO QUESTIONS

TREASURY

The Chancellor of the Exchequer was asked—

Affordable Housing

Pat Glass: What recent discussions he has had with the Secretary of State for Communities and Local Government on fiscal incentives to encourage the construction of affordable housing.

Danny Alexander: The Chancellor is at the G20 meeting in Mexico, so I have been asked to reply.
	On 6 September, the Government announced an ambitious package to boost housing supply, including an additional 15,000 new homes for affordable rent and bringing 5,000 empty homes back into use. We will also help a further 16,500 first-time buyers get back on the housing ladder through Firstbuy. The package includes a £10 billion debt guarantee, which will enable housing associations to benefit from the Government’s hard-earned fiscal credibility.

Pat Glass: I thank the Minister for that answer, but we have lost 120,000 construction jobs since 2010 and we are building 100,000 fewer affordable homes than even this Government tell us we need each year. When the Minister reflects on the choices he had before him, does he still believe that slashing the affordable housing grant by 60% at the same time as giving a massive tax cut to millionaires was the right thing to do?

Danny Alexander: In fact, the decision we made to move to a new affordable rent model to get more homes for the money available to us—the auction was over-subscribed, with 170,000 properties in the affordable sector being built under that model—was a good use of very limited resources, and a much more efficient use of them than the previous Government achieved.

Richard Bacon: Has the Chief Secretary had a chance to look at the report by the National Self Build Association, “Lessons from International Self Build Housing Practices”, and does he agree that if we were to do more to help self-builders, we could help solve many of our housing problems, as well as increase local council tax revenue and stamp duty for the Treasury?

Danny Alexander: I have not had a chance to study that report, but, in the light of my hon. Friend’s question, I certainly will. He will know that the new national planning policy framework specifically encourages self-build, and many of the planning system reforms the coalition Government have pushed through will help self-builders to achieve their aspirations.

Meg Hillier: The Chief Secretary spoke about the bidding for affordable housing, but the well has now run dry. Housing associations in my area have no more money to spend on affordable housing, and the birth rate in my area is increasing. What will the Chief Secretary do to ensure that in future people in Hackney and around the country have affordable homes to live in?

Danny Alexander: I want to see more affordable homes built. That is why this Government are the first Government to put in place Government guarantees for housing associations; that was never done by our predecessors. The Infrastructure (Financial Assistance) Act 2012, which received Royal Assent last week, will enable housing associations to benefit from £10 billion of Government guarantees, lowering their cost of finance and enabling them to build more homes. That has been widely welcomed in the housing association sector, including by the National Housing Federation. I think the hon. Lady should welcome it, too.

Andrew Stunell: I greatly welcome the progress that has been made, but it is equally important to ensure that we have good construction standards for new housing. May I also impress upon Ministers the importance of supporting the zero-carbon homes target?

Danny Alexander: Let me start by paying tribute to my right hon. Friend for the work he did at the Department for Communities and Local Government, especially his leadership of the empty homes programme, which is making a major contribution to bringing homes back into use. I understand the importance of the zero-carbon homes programme. The building industry has argued for that, and I hope we will make progress on it soon.

Job Creation: Private Sector

Chris Skidmore: What fiscal steps he is taking to encourage job creation in the private sector.

Gavin Williamson: What fiscal steps he is taking to encourage job creation in the private sector.

Danny Alexander: Despite these tough economic times, under this Government private sector employment has increased by more than 1 million since 2010, as firms benefit from our stable and credible fiscal policy, but, of course, we are not complacent. We are helping private sector growth through a radical programme of reforms and investment, including the £2.5 billion regional growth fund, issuing up to £50 billion in guarantees for infrastructure and housing, and funding 250,000 more apprenticeships than the previous Government had planned.

Chris Skidmore: Today marks the halfway point of the coalition Government. As the Minister said, there are 1 million more private sector jobs than there were in 2010 and more people in employment than ever before. Will he work even harder to build on his fantastic record in the second half of this Government’s term?

Danny Alexander: Yes, I certainly will. [Interruption.] I know the Opposition do not like to hear this, but my hon. Friend is right to highlight the good performance of the British labour market and the facts that the private sector has created more than 1 million new jobs in the last two and half years and that there are more people in employment in this country than ever before.

Gavin Williamson: Under the Labour Government, we lost 65,000 private sector jobs in the west midlands. In stark contrast, since 2010 my constituency alone has already secured £400 million in investment. What more will my right hon. Friend do to secure private sector jobs in South Staffordshire and the west midlands?

Danny Alexander: My hon. Friend is right to say that the Labour party’s record on encouraging the private sector was at its most catastrophic in the west midlands, for which the figures he gave are absolutely correct. That is why another £124 million of funding for projects in the west midlands was announced in round three of the regional growth fund and why we are providing additional support for the automotive sector, which is so important in his constituency and region. Of course the improved climate for business, the removal of regulations and the funding for apprenticeships will benefit businesses in the west midlands, as well as in the rest of the country.

Geraint Davies: Yesterday, a report from the Welsh Government showed that scrapping tolls on the Severn bridge would increase the value of the Welsh economy by £107 million. Will the right hon. Gentleman commission a report to show how quickly the cost of reducing and getting rid of the tolls would be offset by the increase in income tax resulting from more jobs created in Wales?

Danny Alexander: The hon. Gentleman mentions finance in Wales, so I would have thought he might have started by welcoming the announcement I made two weeks ago on a new funding settlement for Wales and the commitment, in principle, for the first time ever—this was never made by the Labour party when it was in government—to borrowing powers for the Welsh Government. That is a major step forward. We will hear shortly from the Silk commission, which is examining
	revenue-raising powers. I will certainly consider the matter the hon. Gentleman raises in response to the Silk commission.

Margaret Ritchie: The Chief Secretary to the Treasury will be aware of ongoing ministerial discussions about setting the rate for corporation tax in Northern Ireland. Can he advise on the recommendation the Treasury will make to the Prime Minister, who will be setting that level and making a determination shortly?

Danny Alexander: I am not going to prejudge the work of the joint ministerial working group, which includes Ministers from the Northern Irish Government, my colleague the Exchequer Secretary, who is there on behalf of the Treasury, and the Northern Ireland Secretary. That group will soon produce a report, which will come to the Treasury and to the Prime Minister. We look forward to considering it and responding in due course.

Brooks Newmark: Does the Chief Secretary agree that the seed enterprise investment scheme announced by the Government in the past year is the sort of highly attractive fiscal incentive that will both encourage angel investors to back entrepreneurs and, at the same time, stimulate the job growth in the private sector that we need?

Danny Alexander: I congratulate my hon. Friend on the work he has been doing to promote the seed enterprise investment scheme. His description of it is absolutely right, and I know it is being looked at widely by investors who wish to invest in small firms in this country. I hope it will help to transform the landscape for that sort of investment in newly formed companies in this country, and I hope that he will continue his hard work.

Cathy Jamieson: When the Government introduced their flagship policy on a national insurance holiday scheme they proclaimed that about 400,000 businesses would benefit. In answer to a parliamentary question in May, Ministers told me that about 16,000 applications had been received. Will the Chief Secretary tell the House how many businesses have now applied? Is it not time to listen to Labour and the Federation of Small Businesses, and extend this scheme across the country and ensure that all small businesses can benefit from it?

Danny Alexander: I think we have heard yet another unfunded spending commitment from the Labour party in that question. The hon. Lady is right to say that this scheme has not been taken up as widely as we had expected, which is why we are putting in place other measures to support small and growing businesses: the funding for lending scheme will get finance to small firms; tax incentives of the sort just mentioned by my hon. Friend the Member for Braintree (Mr Newmark) will help to get investment in small and medium-sized enterprises; and of course the Government have set a target of 25% of procurement from small firms, too. That is the right policy for small businesses in this country.

Labour Statistics

Philip Hollobone: What recent assessment he has made of the level of employment in (a) Kettering constituency, (b) Northamptonshire and (c) England.

Sajid Javid: The number of people in employment in the year to June 2012 was 47,000 in Kettering, 347,000 in Northamptonshire and 24,497,000 in England. I am pleased to tell my hon. Friend that the number of people employed in each of those three areas is higher than when the Government took office.

Philip Hollobone: The employment rate in Kettering is well above the national average. Of all the policy options before the Chancellor, which offered the best prospects of sustained, long-term and lasting employment growth for my constituents in the borough of Kettering?

Sajid Javid: The one policy that brought the coalition Government together was our determination to deal with the record budget deficit we inherited. When the Government came to power, the previous Government were borrowing £300,000 a minute. We have cut the deficit by 25%, which has brought confidence and jobs back to Britain.

Barry Sheerman: As an English and a Yorkshire MP I have a great interest in how the Heseltine review, “No Stone Unturned”, will help my region. Some of us in Yorkshire are very pleased with the report, because there is a glimmer of hope for more jobs and more investment in Yorkshire. What will the Treasury do to follow up the report that it commissioned?

Sajid Javid: This Government rightly commissioned the report because we believe that Lord Heseltine has a lot of experience in that area. We will study it carefully and will respond in due course.

Peter Bone: Does the Minister realise that unemployment in my constituency went down last month? Does he also realise that in the neighbouring constituency, Corby, the unemployment level fell by 5%? Does that not show that the Conservative-led Government is succeeding in Northamptonshire?

Sajid Javid: My hon. Friend is absolutely right. In the first two years of this Government, the private sector created 1 million new jobs whereas in the last 10 years of the previous Government the sector created about half of that figure.

Catherine McKinnell: One way to tackle youth unemployment in Kettering and Northamptonshire and across the UK would be for the Government to commit now to repeating Labour’s tax on bank bonuses on top of the bank levy to fund much-needed new jobs for young people. Is the Minister aware that in some parts of Northamptonshire, such as Corby, the number of under-24s on the dole for more than 12 months has gone up by a shocking 233% in just the last year?

Sajid Javid: I am not surprised that the hon. Lady is talking about youth unemployment, because in the last 10 years of her Government it rocketed by 72% from 534,000 to 921,000. The previous Government created the problem and this Government’s policies are bringing the number down.

Employee Ownership

Pauline Latham: What assessment he has made of the fiscal implications of the Government’s proposed employee-owner scheme.

Jesse Norman: What recent representations he has received from businesses on the fiscal implications of employee ownership.

David Gauke: The Government expect that the scheme will cost up to £100 million in 2017-18. The initial estimate will be refined following the Department for Business, Innovation and Skills consultation on the implementation of the new employee-owner status, which involves engagement with business and others and will close on 8 November. The annual breakdown of the estimated Exchequer cost of the policy will then be published at the autumn statement once it has been certified by the Office for Budget Responsibility.

Pauline Latham: Will the Minister update the House on the response he has had from businesses and business organisations about the new employee organisation ownership scheme?

David Gauke: I am pleased to tell the House that the likes of the Federation of Small Businesses, the British Chambers of Commerce and the Institute of Directors have warmly welcomed the proposal, which will help entrepreneurs and start-up businesses.

Jesse Norman: Studies have shown that employee-owned companies grow as fast as limited companies, are more resilient and better at creating and keeping jobs, and have higher levels of staff well-being and fairer pay, which means that they are proven to create social value. As well as removing current tax incentives, will the Government consider a new capital gains tax relief for businesses sold into employee ownership?

David Gauke: My hon. Friend will be aware of the Nuttall review, which reported last week. The Treasury is also considering its role in helping employee ownership to support growth as well as options to remove barriers, including tax barriers. That work is being considered in the run-up to the autumn statement.

Lindsay Roy: Does the Minister agree with the chief executive of Sainsbury’s, who said that “trading employment rights” for company shares is
	“not what we should be doing”?

David Gauke: What Sainsbury’s does is a matter for Sainsbury’s, but I also point out the comments made by the likes of the leaders of the Federation of Small
	Businesses, the British Chambers of Commerce and the Institute of Directors, who have said that this measure will help entrepreneurs, start-up businesses and the fast-growing companies that we need. Surely the whole House should welcome that.

Michael Meacher: Given that the Government have been keeping extremely mum about the tax avoidance implications of the scheme and that it looks like a wide-open tax loophole for the better off, what capital gains tax avoidance does he estimate it will create?

David Gauke: In the design of the scheme we will take steps to deal with tax avoidance opportunities to ensure that we do not create any loopholes, but this is a scheme that will encourage entrepreneurs and start-ups to provide businesses with an opportunity to expand rapidly, and it is exactly the sort of flexible approach that this country needs in the current economic climate.

Nick Harvey: Will the Minister clarify the status of the idea of trading employee rights for share ownership? It has been described as a voluntary scheme, but does the Minister accept that it will swiftly become a de facto compulsory scheme? What level of employee shareholding is anticipated? The media have speculated that it could range from 2,000 from 50,000. It might be acceptable at 50,000, but it would be very different at 2,000.

David Gauke: There will be a range of options—the minimum is 2,000, and the maximum is 50,000—but this is not going to be a matter that is compulsory. It will not be the right answer for every business, but there are some businesses that need flexibility to find employee status somewhere between a full employee and someone who is self-employed such as a partner, as many hundreds of thousands of people are. I think that it is a sensible, pragmatic response.

Public Sector Borrowing

Tom Blenkinsop: What the level of public sector net borrowing was in the (a) first six months of 2012-13 and (b) equivalent period in 2011-12.

Greg Clark: Public sector net borrowing totalled £37 billion in the first six months of 2012-13, compared with £62.4 billion in the equivalent period in 2011-12. However, income and expenditure vary throughout any year, and it is too early to draw firm conclusions about the year as a whole.

Tom Blenkinsop: Between 2010 and 2015, debt will increase under the coalition by £465 billion in just five years in real terms. How much of that debt is due to an increase in borrowing for higher welfare benefit costs as a result of the Chancellor’s double-dip recession?

Greg Clark: I am amazed that the hon. Gentleman has the temerity to talk about debt when the legacy of the previous Government has made it clear that it has been the worst in the G7. The Office for Budget
	Responsibility has said that the changes in Government spending have directly added to gross domestic product, and have helped matters, rather than subtract from it.

Nick Gibb: Government borrowing will be higher when multinational companies pay royalties, management charges and technical licence fees between group companies and across borders, which will depress taxable profits in the UK and shift them abroad. Ensuring such payments properly reflect the service or technical knowledge provided is a complex transfer pricing issue, so does the Minister share my view that tackling abuses in that area is not about the number of HMRC staff but about ensuring that they have the right expertise and experience?

Greg Clark: My hon. Friend is absolutely right. It is crucial that the right skills are there, but we have taken a role internationally in leading this. In fact, in Mexico, the Chancellor is leading the way across the world in making sure that we have a co-ordinated regime.

Christopher Leslie: I do not quite understand why the Minister is reluctant to be straight with the House on the facts, particularly given the question asked by my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop).

Mr Speaker: Order. I am sure that the hon. Gentleman is not suggesting that any Minister would be anything other than straight. He may want to deploy another word with reference to dealings with the House.

Christopher Leslie: Absolutely. Perhaps it was inadvertent—I would not in any way wish to imply that the Minister was deliberately obfuscating on the facts. I wanted to pick up on a specific question. As I understand it, public sector borrowing in the first six-month period of the last financial year was £62.4 billion. It was £65.1 billion in the first six months of this financial year, so will he confirm that that is £2.6 billion higher, that borrowing has risen, and that the deficit has gone up?

Greg Clark: No, the numbers vary from month to month. The hon. Gentleman needs to wait until the end of the financial year. January is the key month for these things, as he knows, but if he is interested in getting matters straight on the facts, will he clarify the shadow Chancellor’s suggestion that there was no structural deficit before the recession, because according to the IMF not only was there a structural deficit but it was the worst in the G7?

Christopher Leslie: As I understand it, Mr Speaker, we ask the questions—the Minister is supposed to answer them. Why will he not confirm that borrowing figures are higher and that the deficit has risen? Will he stop being so complacent, get a grip of our economy and public expenditure, and confirm that the Government will keep their promise? The Chancellor said that the coalition Government will take responsibility for balancing Britain’s books within five years, so will they keep that promise?

Greg Clark: The facts are as I set out, but if the hon. Gentleman is implying that in some way he is against a deficit, that he wants to pay down the deficit, can he
	explain why he can hold that position and simultaneously be in favour of increasing borrowing? The shadow Chancellor is on the record as saying that his plans mean a short-term increase in borrowing. Let him say by how much and when.

Mr Speaker: Order. I am chairing these proceedings. Let me just make it abundantly obvious to the Minister: the hon. Member for Nottingham East (Chris Leslie) gets two questions. He does not get a third and it is not the business of the Opposition to answer questions in this Chamber—that is the responsibility of the right hon. Gentleman in respect of Government policy. Let us be clear about that.

Edward Leigh: Notwithstanding what we have just heard, surely, given the still very high and worrying levels of public debt, is it not incumbent on all coalition Members, from whatever party, to continue to support the Chancellor in the very difficult decisions he may have to take in the coming months that may amount to further cuts to public spending?

Greg Clark: It is in everyone’s interest to support the path we have embarked on to pay down the deficit. We know that the confidence in the UK economy, which has led to record low interest rates, depends on credibility—a credibility that the policies of the Opposition, by borrowing more, would jeopardise.

Long-term Unemployment

Gavin Shuker: What recent assessment he has made of the effect of the Government’s fiscal policies on the level of long-term unemployment.

Rushanara Ali: What recent assessment he has made of the effect of the Government’s fiscal policies on the level of long-term youth unemployment.

Tom Greatrex: What recent assessment he has made of the effect of the Government’s fiscal policies on the level of long-term youth unemployment.

Sajid Javid: The UK labour market is showing some signs of recovery. There are more people in work now than ever before, and youth unemployment is at its lowest since 2011. The Youth Contract was launched in April to support up to 500,000 young people into employment, and the Work programme has been under way since 2011.

Gavin Shuker: In my constituency, long-term youth unemployment is not up by 11% or 110%, but by 1,150%. Will the Government now apologise for their complacent decision to scrap the future jobs fund?

Sajid Javid: I think it is the hon. Gentleman who should be apologising. He is probably having a hard time explaining to his constituents why the number of young people on jobseeker’s allowance in the last five years of the previous Government went up by 45%. I have some good news for him, however. Under this
	Government, that number is down, and under this Government the number of vacancies in his local jobcentres is up by 30%.

Rushanara Ali: All other Olympic boroughs received a much-needed economic boost from the Olympic games, but the Office for National Statistics figures show that youth unemployment increased in my constituency between June and October, not to mention the 141% increase in long-term youth unemployment in the past year. Does the Minister agree that tackling this problem requires action from the Government, with a bank bonus tax to fund 100,000 jobs for young people, and action locally by the council, to take this issue seriously?

Sajid Javid: I know the hon. Lady takes this issue very seriously, which is why I believe she took her right hon. Friend the shadow Chancellor to Queen Mary university recently to discuss it with young people. I hope that they told young people that under the previous Government youth unemployment was created as a problem—up 72% in 10 years. I hope she also told them that youth unemployment has fallen by 62,000 in the last quarter because of the Youth Contract, the Work programme, investment in apprenticeships and other Government policies.

Tom Greatrex: Long-term youth unemployment in my constituency in the past two years has increased by 188%. Rather than flinging back his low-grade abuse, could the Minister explain to the House his objection, as we approach bank bonus season, to implementing a bank bonus tax to help fund jobs for those young people?

Sajid Javid: The hon. Gentleman will know that the Government have introduced a permanent tax on bank balance sheets, which will raise far more than a bank bonus tax. If he is interested in the fiscal action the Government are taking to create jobs, maybe he can tell his constituents about the brownfield allowance the Government introduced for North sea oilfields a couple of months ago. A few weeks later there was investment of £1.6 billion, creating up to 2,000 jobs in Scotland and beyond.

Harriett Baldwin: One of the fiscal measures that best increases the incentive to find work for those who have been out of work for a long time is the benefit cap. Is the Minister surprised to learn that this morning a measure that will save the taxpayer half a billion pounds over the next two years and greatly increase the incentives to work was voted against by the Labour party?

Sajid Javid: I thank my hon. Friend for bringing that to the House’s attention, and I am not surprised to learn it, given Labour’s opposition to the benefit cap. The Government are determined to make the welfare system work in order to help people find employment, and that includes the benefit cap as well as the introduction of universal credit.

Andrew Selous: Does my hon. Friend recognise that it was virtually impossible to be long-term unemployed under the last Government,
	because they used to take people off the register, put them on a short-term course, and then put them back again, and is he pleased that we are being more straightforward?

Sajid Javid: My hon. Friend makes a good point. A number of people have made those accusations. The important thing is that youth unemployment is falling—down by 62,000 in the last quarter.

Alan Reid: Has my hon. Friend considered the submission that the Government have received from FairFuelUK showing that putting up fuel duty will hinder job creation, and will he give serious consideration to cancelling the planned January fuel duty increase inherited from the Labour party in order to boost job prospects?

Sajid Javid: We carefully consider all submissions from stakeholders, including the FairFuelUK campaign. The important thing is that had the Government continued with their inheritance on fuel duty, that duty would have been 10p higher, which would have made things a lot more difficult for ordinary people.

Affordable Housing

Chi Onwurah: If he will use the revenue received by the Exchequer from the forthcoming auction of the 4G mobile telephone spectrum for the purpose of building affordable homes over the next two years.

Emma Reynolds: If he will use the revenue received by the Exchequer from the forthcoming auction of the 4G mobile telephone spectrum for the purpose of building affordable homes over the next two years.

Gordon Banks: If he will use the revenue received by the Exchequer from the forthcoming auction of the 4G mobile telephone spectrum for the purpose of building affordable homes over the next two years.

Danny Alexander: No decision has been taken on how to use the full revenue from the 4G mobile spectrum auction, but the Department for Business, Innovation and Skills was allocated an entitlement of up to, but no more than, £600 million for science projects from the fund. As I said in answer to an earlier question, on 6 September the Government announced an ambitious housing package to boost housing supply, building on our £4.5 billion investment to deliver 170,000 affordable homes over the spending review period.

Chi Onwurah: Perhaps the Chief Secretary is reluctant to commit because he does not trust his colleagues in the Department for Culture, Media and Sport to overcome their history of delay and dither when it comes to 4G. In Newcastle, thousands of families are on the council house waiting list and thousands of construction workers are unemployed. Does he not agree with the director general of the CBI, who said that this plan was exactly what the economy needed?

Danny Alexander: I recognise the concerns that the hon. Lady and other MPs have about the provision of housing in their own constituencies, and that is precisely why, on 6 September, we announced, among other things, the availability of up to £10 billion of Government guarantees for housing associations—precisely to enable them to build more affordable housing.

Emma Reynolds: In the last quarter, there was a 2.5% contraction in the construction sector, and since the Government came to power 119,000 construction jobs have been lost. Why, therefore, do the Government not take their own advice, cut through the dither, sell off 4G, and use the money to construct 100,000 affordable homes and create 150,000 jobs?

Danny Alexander: The Department is getting on with the sale of 4G as quickly as possible, but the hon. Lady should be a bit wary about the policy she is promoting. For a start, it is based on assuming that we continue with the Government’s affordable rent policy, which her colleagues oppose, but without it the costs would be a great deal greater. Also, I think she is proposing to reverse the £600 million investment in science policy, which we have already committed to from this fund.

Gordon Banks: My question is very, very simple. Will the Chief Secretary use the revenue from this sale to create jobs?

Danny Alexander: I note that when the Labour party was in government and had receipts from the 3G auction, it used the resources to pay down debt, which was very prudent. Instead, we are bringing forward policies to support housing, such as the Government guarantees, which will be available to housing associations in Scotland, as well as in other parts of the country.

Damian Hinds: Alton in east Hampshire has just benefited from a much-needed £9.5 million affordable housing scheme. What more can be done, working with other Departments, to bring on more such schemes, partly using council land, especially in the overcrowded south-east?

Danny Alexander: My hon. Friend is right to highlight the importance of releasing public sector land for development for housing, including affordable housing. The Homes and Communities Agency is well ahead of its targets for releasing such land and for schools—

Mr Speaker: Order. Are we referring to the proceeds of the auction?

Danny Alexander: I am answering the question, which relates to the proceeds of the auction. We are using other policies, rather than the proceeds of the auction, to support this objective.

Gary Streeter: Rather than spending money we do not yet have, would it not be better for the Department to continue to work with the Department for Communities and Local Government and others in unlocking major housing schemes which have become stuck in recent years, such as the proposed
	new town of Sherford in my constituency? Is that not a better way of building affordable homes and boosting the economy?

Mr Speaker: Order. The hon. Gentleman is a very experienced Member. The question is about using the revenue from the auction —

Gary Streeter: I am talking about affordable housing.

Mr Speaker: Order. That is the term of—[Interruption.] Order. No assistance is required from the hon. Gentleman. He will accept my ruling and he can like it or lump it.

Danny Alexander: Rather than the proposal to use revenues from the auction, there are other policies that we can use to support the objective highlighted in the question, including those highlighted by the hon. Member for South West Devon (Mr Streeter)—planning reform, releasing public sector land and other fiscal steps that the Government can take which do not involve committing to this policy now.

Charlie Elphicke: Will the Minister confirm answers to my written questions—that the reserve for the auction is £1.4 billion and that half has been allocated to science and higher education investment? Is this a case of Labour spending money that we do not have, yet again?

Danny Alexander: It is exactly that. The reserve price is £1.4 billion, of which £600 million has been allocated to important science projects, such as the Graphene institute in Manchester. Were we to follow the advice of the Opposition, we would have to cancel significant science projects which are vital to growth in this country. That would be the wrong policy for the British economy.

Cost of Living

Glyn Davies: What fiscal steps he has taken to reduce the cost of living.

David Gauke: The Government have taken wide-ranging action to support households. We cut fuel duty last year and have kept it frozen since then. We have also helped those in work by raising the personal allowance by £1,100 in April 2013—the largest tax cut for the median earner in more than a decade. The Government recently announced another year of a council tax freeze and a reduction of the rail fare cap for two further years.

Glyn Davies: A major factor in the costs facing families across the United Kingdom is the rapidly increasing cost of energy. Does my hon. Friend agree that Governments have a responsibility to limit such increases as far as possible, including the costs to energy users of paying for the unsustainably large subsidies paid to onshore wind farm developers?

David Gauke: My hon. Friend is right to raise the issue of energy prices. The Government are doing what they can on that front. We are supporting Ofgem’s work in
	ensuring that there is competition in the energy markets, and of course we are determined to do what we can to get people on lower tariffs.

Stephen McCabe: Does the Minister accept that the Government’s increase in VAT has led to 5p on a pint of beer and 3p on a litre of fuel?

David Gauke: We have to take action to try to deal with the deficit that we inherited, and let us not forget that. The hon. Gentleman mentions fuel. Because of the steps that we have taken on fuel duty, petrol pump prices could be as much as 10p lower per litre than they would have been had we stuck with the fuel duty escalator that we inherited.

Banking Reform

Andrea Leadsom: What recent steps he has taken to reform banking and to redirect banking fines to the public purse.

Greg Clark: The draft Banking Reform Bill outlining fundamental reforms to the banking sector was published last month and is undergoing pre-legislative scrutiny. We have tabled amendments to the Financial Services Bill which provide for fine revenues net of enforcement costs to go to the public purse in future. The Bill is being debated today in the House of Lords. Some £35 million of those fines received so far this year will be used to support armed forces charities.

Andrea Leadsom: Does the Minister agree that one of the best ways to ensure good practice in future is through more transparency and competition in the banking sector? Does he further agree that full bank account portability could be a great way to achieve that?

Greg Clark: I do agree that we need much more competition in the banking industry, and account portability can have a major role in advancing that. The Vickers commission looked at it, and my hon. Friend has been very vigorous in proposing ways in which she thinks it can be implemented. My hon. Friend the Economic Secretary and I will meet her to discuss how we can advance these proposals.

Bill Esterson: Small businesses are responsible for 40% of the jobs in my constituency, but with the banks not lending to small businesses, it is very hard for them to grow and create the extra jobs that are needed. What action will the Minister take to make sure that the banks do lend to small businesses so that they can play their part in the growth and jobs desperately needed in my constituency and elsewhere in the country?

Greg Clark: The hon. Gentleman makes an important point. It is crucial that we get funds to small businesses to get them lending. In fact, lending to small and medium-sized enterprises is up 13% over the past year. He will know that the new funding for lending scheme, which is being conducted in co-operation with the Bank of England, is making £80 billion available to the banking system for the purpose of lending.

Steven Baker: We need more competition in banking. Later today, I will chair a meeting with Mr David Fishwick, who has been trying to start a responsible and trustworthy local bank but has found that the barriers to entry are far too high. Will my right hon. Friend look at Mr Fishwick’s report on community banking and consider meeting him to discuss his experiences and see whether we can make it easier for communities to create the banks they need?

Greg Clark: I certainly will. I think that there has been a concentration in the number of banks as a result of the financial crisis, and that is not a situation I want to see endure. If the suggestions in the report will help to reverse that, I am all ears.

Andrew Love: Comparisons between banking fines for similar offences in this country and in the United States show that we are well behind the curve in that regard. Has the Minister had an opportunity to speak to the Financial Services Authority about a more robust form of regulation that will ensure that fines are appropriate to the issue at stake?

Greg Clark: The hon. Gentleman, who is a distinguished member of the Treasury Committee, makes an important point. It is crucial that the change we need in the culture of banking is achieved through leadership and also through a clear warning that abuse, mis-selling and all the other vices that banks can fall into will be punished rigorously. The FSA knows my views on that and I will reinforce them to the authority.

Tax Evasion and Avoidance

Bob Blackman: What recent steps he has taken to tackle tax evasion and reduce tax avoidance.

David Gauke: The Government are investing over £900 million is strengthening Her Majesty’s Revenue and Customs’ response to evasion and avoidance and are on course to bring in around £7 billion in additional tax each year by 2014-15. HMRC is increasing the number of staff working on compliance and using innovative approaches to improve how it identifies and tackles evasion. The Government will soon introduce the UK’s first general anti-abuse rule while also strengthening avoidance disclosure rules and publicity.

Bob Blackman: I am a strong supporter of lowering direct tax rates on individuals and companies, but hard-working families in my constituency want to know that companies and high-worth individuals are paying their fair share of tax. What is my hon. Friend doing to ensure that individuals and companies pay their fair share of tax rather than avoiding it?

David Gauke: My hon. Friend is absolutely right. That is why we are taking action to strengthen HMRC’s compliance capability, why we are introducing a general anti-abuse rule, why we want to ensure that everyone pays their fair share of tax, and why the Chancellor made it clear yesterday in Mexico that we are working at an international level to ensure that the system that applies to multinational companies does just that.

Kelvin Hopkins: The Minister talks—it might be wishful thinking—about bringing in an extra £7 billion a year, but the tax gap is at least £120 billion a year, and some people think it is more. Is it not time that the Government took chasing billionaire tax dodgers more seriously and stopped cutting public spending and squeezing the poor?

David Gauke: The hon. Gentleman will be aware that the figure of £120 billion does not have much support from anyone who knows much about statistics. The actual figure is £32 billion. That is the number we inherited from the previous Government and we are determined to bring it down.

Stephen Williams: The Minister will be well aware of the anger of many of our constituents about the activities of companies such as Starbucks and Amazon to minimise their tax rates through aggressive tax avoidance. Is not part of the answer more international co-operation, perhaps among OECD countries, to restrict the ability of those multinationals to siphon off profitable activities into low tax havens?

David Gauke: My hon. Friend is right to point out that we need to be vigilant about aggressive tax avoidance and the diversion of profits from where genuine economic activity occurs. That is why the Chancellor of the Exchequer is leading the way on that, working with the German Finance Minister, and why we had the announcement from Mexico yesterday that the G20 is focusing on that and encouraging the OECD to progress its work so that we can deal with this as soon as possible.

Economic Growth

George Mudie: What estimate he has made of the level of economic growth since the October 2010 spending review.

Sajid Javid: The economy grew by 1.8% in 2010 and 0.9% in 2011. The Office for Budget Responsibility is responsible for producing independent economic and fiscal forecasts.

George Mudie: The Minister will be aware that the Chancellor boasted that there would be growth of 2.6% in 2011 and 2.8% in 2012. Actually, growth has averaged 0.6% over the past two years. What went wrong?

Sajid Javid: The hon. Gentleman is a distinguished member of the Treasury Committee, and I think he knows better than that. The Government introduced an independent Office for Budget Responsibility to make forecasts, and the OBR report in October 2012 said that there were several reasons why the out-turn has been different from the forecasts, including
	“deteriorating export markets…impaired credit conditions”
	and “euro area anxiety”. Perhaps the hon. Gentleman can welcome yesterday’s report from the Centre for Economics and Business Research, which said that Britain would be the fastest-growing economy in Europe in 2013 and 2014. [Interruption.]

Mr Speaker: Order. The shadow Chancellor is perfectly free to decide not to speak when he is on his feet, but that does not mean that instead he can speak from his seat.

George Freeman: On behalf of my constituents, I welcome the news that the economy has returned to growth, and I draw the Minister’s attention to the success in the life sciences sector. Eli Lilly has announced a new early-stage neuroscience facility in the UK, Johnson and Johnson has made Britain the home of its new global innovation centre, and more than £1 billion has been raised this year in early stage funds. Is that not the only sustainable route to a really balanced recovery?

Sajid Javid: My hon. Friend is absolutely right. The only sustainable growth is long-term growth in private sector jobs.

Unearned Wealth

Adrian Sanders: What his policy is on taxation on unearned wealth; and if he will make a statement.

David Gauke: The Government are committed to a fair tax system in which those with the most contribute the most. The UK’s tax system is a progressive one, and wealthy individuals make a substantial contribution to the Exchequer. The Government have increased that contribution in a number of ways since the election.

Adrian Sanders: Social mobility for younger people in Torbay is often curtailed by inequality not of income but of wealth, meaning that far too many will never be able to buy their own homes. Will he redress that imbalance by taxing unearned income as much as we tax the wages of the vast majority of my constituents?

David Gauke: The Government have increased stamp duty land tax on the most valuable properties. We have also increased the rate of capital gains tax. It is a question of balancing that with practicalities; we think that some of the proposals in this area may have a number of practical difficulties. But we have taken action on some of the taxes that have increased the burden on the wealthiest.

Bank Lending

William Bain: What recent assessment he has made of the effect on economic growth of the level of bank lending to businesses.

Greg Clark: As I said to the hon. Member for Sefton Central (Bill Esterson), the Government and the Bank of England are taking action to improve the flow of credit to business. The £80 billion funding for lending scheme is designed to incentivise banks to maintain and boost their lending to businesses and households.

William Bain: According to the Bank of England, net lending by the banks to small and medium-sized businesses fell by a further £2.4 billion in the three months to this
	August. Does not the Government’s failure to address that decline show exactly why the IMF downgraded GDP estimates for Britain by 0.6% for this year, and a further 0.3% for next year?

Greg Clark: The hon. Gentleman calls for action, but I would have thought that the funding for lending scheme was precisely the type of action that he wanted. The Bank of England has been clear that, in the absence of funding for lending, it was quite possible that rates and lending would have declined because of the turbulence and anxiety in the eurozone. Actually, it has been an important factor in getting money to businesses. I hope that the hon. Gentleman will welcome that.

Topical Questions

Tim Loughton: If he will make a statement on his departmental responsibilities.

Danny Alexander: The core purpose of Her Majesty’s Treasury is to ensure the stability of the economy, promote growth and employment, reform banking and manage the public finances so that Britain starts to live within her means.

Tim Loughton: That is all very interesting, but Anne Marie Carrie, the excellent head of Barnardo’s, recently said that the proposal to remove housing benefit from all under-25s
	“is reckless and unfair as it will leave some of this country’s most vulnerable people stranded.”
	I am particularly concerned about the impact on care leavers, who do not have a family home or family to fall back on and for whom a safe and stable roof over their heads means they can keep off the streets, out of the NEET statistics and out of trouble. Will the Chief Secretary guarantee now that he will work with other Ministers to make sure that any changes to housing benefit for under-25s do nothing further to disadvantage that already disadvantaged group?

Danny Alexander: My hon. Friend makes a very important point about care leavers. These ideas have been floated as part of a discussion within Government on the next phase of welfare reform. I will certainly make sure that his point is brought to bear in any discussions on that proposal.

Rachel Reeves: At a time when we are seeing cuts to the budgets for police, NHS and schools, it is right that last week this House gave the Government a mandate to negotiate a real-terms cut in the EU budget. However, instead of developing a strategy to deliver this, the Prime Minister has simply resorted to threatening a veto before negotiations have even begun. Of course, walking away is always an option for any EU Government, but can the Chief Secretary confirm that if Britain or any other country just turns up and uses the veto, the budget will rise in line with inflation anyway, costing British taxpayers an extra £310 million?

Danny Alexander: I start by congratulating the hon. Lady on the news that she is expecting a child, which was announced a few weeks ago. I am sure that the whole House would wish to join me in that.
	Labour’s position becomes ever more extraordinary; its opportunism on Europe seems to know no bounds. That is why we have heard words of unease from several Labour Members who thought that Labour was a pro-European party. This Government have taken the toughest position of any European Government in these negotiations. We saw what happened with the previous Government’s negotiating tactics when they gave away half of Britain’s rebate. We are not going to do that all over again.

Rachel Reeves: I am not sure whether I caught an answer there. Frankly, the Chief Secretary should know better. After all, he was not only the chief press officer for the Cairngorms national park but the chief officer for Britain in Europe, and he should know that the only way to deliver a real-terms cut is to argue for one and build alliances to deliver it. Perhaps he should listen to his Cabinet colleague who said last week that it is “absolutely ludicrous” to threaten the veto now, weeks before the summit. Is that not just the desperate ploy of a weak Prime Minister with no influence, no allies and no strategy? He should get a good deal for Britain—a cut in the budget.

Danny Alexander: The hon. Lady was a pro-European once; I still am. We seem to be seeing an outbreak of amnesia on the Labour Benches. Not only has the hon. Lady forgotten what Labour did in the last multiannual financial framework negotiation, when it gave away half of Britain’s rebate by not forming any alliances and instead giving up vast amounts—billions of pounds—of Britain’s money, but the shadow Chancellor seems to have forgotten that more recently his party was running the largest structural deficit in the world economy in the good times, leaving this country more exposed than ever to the financial crisis. This country does not want amnesia from Labour—it wants an apology.

Graham Evans: Manufacturing in this country halved during the Labour period, falling from 22% of GDP in 1997 to 11% in 2010, and during that period the sector employed half the number of people it did in 1997. With this in mind, what recent representations has my right hon. Friend received regarding investment in manufacturing industry in the north-west?

Danny Alexander: My hon. Friend is right to highlight the work that we are doing to increase manufacturing through, for example, the advanced manufacturing technology institute and investment from the regional growth fund. We have had a number of representations from the north-west, not least from my hon. Friend the Member for Burnley (Gordon Birtwistle), who has made representations on capital allowances for businesses.

William Bain: Nearly three in 10 workers in my constituency, including half of all part-time workers, earn less than the living wage of £7.45 an hour. Does the Chief Secretary, unlike the Prime Minister, back the living wage? Is he not wrong to boast about a recovery that is not being felt in the pay packets of millions of people on low and middle incomes?

Danny Alexander: Labour Members had 13 years to introduce a living wage; if they believed in it so much they could have done something about it when they
	were in office. This Government are increasing the income tax personal allowance towards the goal of £10,000 set in the Liberal Democrat election manifesto. As of next April, the amount of income tax paid by someone working full time on the minimum wage will have been halved under this Government. I would have thought that the hon. Gentleman would want to welcome that.

Ian Swales: The regional growth fund is a great help in sorting out the economic devastation left by the previous Government in areas such as Redcar and Middlesbrough. Does the Minister agree with Michael Heseltine that areas such as the Tees valley can become economic powerhouses again, and will he support a further round of the regional growth fund?

Danny Alexander: I welcome what my hon. Friend has said about the regional growth fund. With him, I have visited recipients of that fund in his constituency, and seen at first hand the benefits on Teesside. He will also welcome the fact that Teesside is a candidate in the next wave of city deals, which will provide an opportunity further to enhance the economy of that area. I hear his representation for a fourth round of the regional growth fund, and I will consider that alongside other policies in the normal way.

Lilian Greenwood: Instead of insulting hard-working parents and calling them “fiscal nimbys”, will the Minister explain how it is fair that a couple earning up to £100,000 a year will keep all their child benefit, while a one-earner family on £50,000 will see theirs cut?

David Gauke: We looked at introducing this measure on the basis of household income, but it would mean bringing 8 million households into the tax credit system and impose a much greater administrative burden on many people. At least Labour Members are consistent: they have opposed every measure to try to reduce the welfare budget, whether it be the welfare cut or child benefit for higher earners. It is time for us all to look at public spending in that area and bring it under control, but the Labour party will simply not do that.

Karl McCartney: In the light of a recent report by the Centre for Economics and Business Research, which suggests that UK growth will outstrip many of our European neighbours in 2013 and 2014, will my right hon. Friend assure the House that the Government will continue to deal with the UK’s structural deficit? That deficit started to emerge before 2008, despite repeated protestations to the contrary by the shadow Chancellor.

Danny Alexander: Yes, I can certainly give my hon. Friend the assurance he requires. The coalition Government have put Britain back on the path to fiscal credibility, and we have cut the deficit by a quarter in our first two and a half years in office. We intend to continue in that policy direction, which is endorsed not only by the CEBR but by many other organisations.

Andrew Love: What is the Minister going to do about all those multinational companies that are paying little or no tax? Her Majesty’s Revenue and Customs claims that it is powerless because those companies are gaming the system. Instead of pious statements issued from Mexico about what we might or might not do, may we have some action from the Minister? He could start by increasing from 65 the number of tax experts that actually deal with this problem.

David Gauke: Anyone would think that there was a completely different arrangement in 2010, but I am afraid that is not the case. The Government are working at an international level to ensure that multinationals pay the tax that is due, and that profits on their economic activity is paid where it occurs. We are also strengthening HMRC’s capacity in that area and giving it greater skills to tackle the issue. I would have thought the Labour party would welcome the progress we are making when compared with the lack of progress under the previous Government.

Stephen Metcalfe: Does my right hon. Friend agree that one way to stimulate additional growth is through better use of the prompt payment code? Will he join me in calling on businesses and public sector organisations to adopt that code and adhere to it?

Danny Alexander: I very much agree with my hon. Friend, and we have already raised that issue with central Government Departments. We will certainly reinforce that message. I know that my right hon. Friend the Minister for the Cabinet Office and Paymaster General has been advancing that as part of the reforms to public procurement, and I will pass on my hon. Friend’s concerns to him.

Stephen Hepburn: When universal credit is introduced next year it will cut the living standards of hundreds of thousands of working people—yes, working people. Will the Minister join the Archbishop of York, the Mayor of London and the Labour party and demand a living wage?

Danny Alexander: I think the hon. Gentleman’s criticism of universal credit is extraordinary. Universal credit will simplify the benefits system and ensure a single, clear process for all people in receipt of benefits. Having a clear single taper will ensure that everybody knows they will be better off in work—something they could not be sure of under the previous Government.

Nigel Mills: The Government have seen the benefits that transparency can bring. Would it be good to require large corporates to publish their tax returns so that we can all see how they achieve the low rates of tax they pay?

David Gauke: It is right that large corporates engage in this debate, and there is a lot of public interest in the matter. One must ask whether tax returns in themselves will provide the full information—my hon. Friend has great expertise in this area—and whether that is the
	right way to address the issue. We have a tradition of taxpayer confidentiality in this country, as does every major economy.

Robert Flello: Will those on the Treasury Bench tell us the expected cost to HMRC in, for example, extra staffing and IT support of dealing with the massive number of extra self-assessment returns—it is estimated at around 500,000—that will result from child benefit changes?

David Gauke: The cost of implementation of the child benefit policy will be £100 million over five years, but it will bring in £1.7 billion in the first year. I should also point out that the likelihood is that the number of people in self-assessment next year will be no higher than the number in self-assessment last year.

David Rutley: Will my hon. Friend tell the House what steps he is taking better to support small and medium-sized enterprises through the tax system?

David Gauke: We have taken a number of measures, including reducing the small profits rate from 22%, which it would have been, to 20%. We have also introduced measures such as seed enterprise investment schemes and small business rate relief. We have taken such measures because we recognise that small businesses will be an engine for growth for our economy and in employment.

Seema Malhotra: The Prime Minister has said that a family with children will lose an average of £511 under the Government’s changes this year alone. Is that fair when the Government are cutting taxes for the most wealthy?

Danny Alexander: The Government are increasing taxes on the wealthiest in society and using that money for a number of things, including to put in place a new free child care entitlement for disadvantaged two-year-olds; to extend the child care entitlement of three and four-year-olds to 15 hours a week; and to reduce the income tax personal allowance, which benefits families in work. The hon. Lady should welcome rather than criticise those policies.

Duncan Hames: Some pensioners with capped draw-down and self-invested pension plans have seen their retirement income halve as a result of decisions by the Government Actuary’s Department. How would the Minister suggest those pensioners cope in retirement with such a sharp fall in access to what is, after all, their own money?

Sajid Javid: My hon. Friend is right to point out that pensioners are facing pressure because of low interest rates and longevity. The Government Actuary’s Department makes recommendations to the Government and we must take them seriously—we keep the matter constantly under review.

Sheila Gilmore: The Government make a great deal of creating 1 million private sector jobs—[Hon. Members: “Hear, hear!”] Wait, wait. Half
	of those jobs, according to their statements, were in place after eight months of their coming to office, meaning that in the following 22 months only another half a million jobs were created. That suggests that the rate of growth has slowed substantially as a result of the Chancellor’s policies.

Danny Alexander: Once again, Labour Members are on the search for bad news, but the hon. Lady has picked the wrong subject. More than 1 million private sector jobs have been created since the election. The most recent figures show that tens of thousands more jobs have been created in the private sector and the largest ever number of people in employment in this country. That should be welcomed by everyone in the House, including her.

Several hon. Members: rose —

Mr Speaker: Last but not least, I call Mr Andrew Bridgen.

Andrew Bridgen: Will the Minister update the House on steps he is taking to ensure that the affordable housing programme remains on course to deliver the £19.5 billion of public and private investment in affordable housing over the course of this Parliament?

Danny Alexander: Yes, I will. The affordable rent programme was over-subscribed and will deliver more homes than originally expected. My colleagues in the Department for Communities and Local Government will ensure that they are delivered as quickly as possible. By putting in place the new guarantee programme for housing associations, we can further accelerate that programme, ensuring that we meet the targets my hon. Friend describes.

Child Abuse Allegations (North Wales)

Theresa May: With permission, Mr Speaker, I would like to make a statement on historic allegations of child abuse in the North Wales police force area.
	In 1991, North Wales police conducted an investigation into allegations that, throughout the 1970s and 1980s, children in homes that were managed and supervised by Clwyd county council were sexually and physically abused. The result of the police investigation was eight prosecutions and seven convictions of former care workers.
	Despite the investigation and convictions, it was widely believed that the abuse was in fact on a far greater scale, but a report produced by Clwyd council’s own inquiry was never published, because so much of its content was considered by lawyers to be defamatory.
	In 1995, the then Secretary of State for Wales, my right hon. Friend the Member for Wokingham (Mr Redwood), appointed a QC to examine all the relevant documents and recommend whether there should be a public inquiry. The recommendation was that there should be not a public inquiry but an examination of the work of private care homes and the social services departments in Gwynedd and Clwyd councils. This work revealed not only shortcomings in the protection of vulnerable children, but that the shortcomings had persisted even after the police investigation and subsequent prosecutions.
	In 1996, my right hon. Friend the Member for Richmond (Yorks) (Mr Hague), the then new Secretary of State for Wales, invited Sir Ronald Waterhouse to lead an inquiry into the abuse of children in care in the Gwynedd and Clwyd council areas. The Waterhouse inquiry sat for 203 days and heard evidence from more than 650 people. Statements made to the inquiry named more than 80 people as child abusers, many of whom were care workers or teachers. In 2000, the inquiry’s report “Lost in Care” made 72 recommendations for changes to the way in which children in care were protected by councils, social services and the police. Following the report’s publications, 140 compensation claims were settled on behalf of the victims
	The report found no evidence of a paedophile ring beyond the care system, which was the basis of the rumours that followed the original police investigation and, indeed, one of the allegations made in the past week. Last Friday, a victim of sexual abuse at one of the homes named in the report—Mr Steve Messham—alleged that the inquiry did not look at abuse outside care homes, and he renewed allegations against the police and several individuals. The Government are treating those allegations with the utmost seriousness. Child abuse is a hateful, abhorrent and disgusting crime, and we must not allow these allegations to go unanswered. I therefore urge anybody who has information relating to the allegations to go to the police.
	I can tell the House that Mark Polin, the chief constable of North Wales police, has invited Keith Bristow, the director general of the National Crime Agency, to assess the allegations recently received, review the historic police investigations and investigate any fresh allegations reported to the police into the alleged historic abuse in north Wales care homes. He will lead a team of officers from the Serious and Organised Crime Agency and other investigative assets as necessary, and the Child
	Exploitation and Online Protection Centre will act as the single point of contact for fresh referrals relating to historic abuse in north Wales care homes. He will produce an initial report reviewing the historic investigations and any fresh allegations by April 2013. I have made it clear to Mark Polin and Keith Bristow that the Home Office is ready to assist with the additional costs of that work.
	In addition, as the Prime Minister said yesterday, the Government will ask a senior independent figure to lead an urgent investigation into whether the Waterhouse inquiry was properly constituted and did its job. Given the seriousness of the allegations, we will make sure that that work is completed urgently.
	Given that there have also been serious allegations about other historic child sex offences, I should also inform the House of the work being conducted by Her Majesty’s inspectorate of constabulary. This will establish a full picture of all forces that have received allegations in relation to Jimmy Savile, examine whether these allegations were investigated properly, and identify wider lessons from the response of the police forces involved. I have been assured by HMIC that its work will also take into account any lessons that emerge from these latest allegations.
	Before I conclude, I would like to warn hon. Members that if they plan to use parliamentary privilege to name any suspects, they risk jeopardising any future trial and, therefore, the possibility of justice for the victims, which I believe the whole House wants to see.
	I believe that the whole House will also be united in sending this message to victims of child abuse: “If you have suffered and you go to the police about what you have been through, those of us in positions of authority and responsibility will not shirk our duty to support you. We must do everything in our power to do everything we can to help you, and everything we can to get to the bottom of these terrible allegations.”
	I commend this statement to the House.

Yvette Cooper: I thank the Home Secretary for her statement. She is right that these are deeply disturbing allegations. Child abuse and sexual abuse of children and young people are among the most despicable of crimes. When adults who should be trusted to care for children abuse their power and position of trust by committing violent crimes, it can haunt those young people for the rest of their lives. That is made worse if society and the institutions charged with protecting children, including in the criminal justice system, fail to step in to provide greater protection or hold the perpetrators to account. The Home Secretary is therefore right to act on the latest concerns.
	There are three major issues, each of which needs to be addressed. First, where crimes have been committed or suspected, we need a proper criminal investigation, led by the police in the pursuit of justice. Secondly, we need to know whether there has been an institutional failure to deal with the issue before, be it turning a blind eye, covering things up or simply failing to get to the bottom of what happened. Thirdly, we need to know what further changes are needed to our current framework for safeguarding children and investigating abuse. However, we cannot look at the allegations around north Wales in isolation. The same three questions—about criminal
	allegations, potential institutional failure and the lessons for today—are just as significant when it comes to the abuse by Jimmy Savile, as well as more current problems, such as the events in Rochdale or the work that the Children’s Commissioner is doing on child sexual exploitation. I am concerned that the Home Secretary’s response will not be wide enough to cover all those issues. Let me take each in turn.
	I welcome the points that the Home Secretary has made today about the new criminal investigation into the allegations in north Wales, and in particular the involvement of the Child Exploitation and Online Protection Centre, which has considerable expertise. Clearly the investigation must go more widely than north Wales if that is where the evidence takes it. I hope that she can provide that assurance to the House. On the historic reviews, I welcome her decision to look again at the Waterhouse inquiry, which I assume will involve looking at whether child abuse that might have taken place outside the care system was sufficiently considered.
	However, we have a whole series of inquiries under way into similar problems, in addition to important police and criminal investigations. As I understand it, there are three BBC inquiries into what happened with Jimmy Savile, a Department of Health inquiry—as well as several separate hospital inquiries—a Crown Prosecution Service inquiry, a new north Wales inquiry and an inquiry by Her Majesty’s inspectorate of constabulary into other forces that may have received allegations about Jimmy Savile. The Home Secretary will know that we have already raised our concern that the Savile investigations should be brought under a single inquiry. We remain concerned that these multiple inquiries have no way to draw together the common themes, the problems or the lessons that need to be learned. Of course we need to get to the bottom of what is happening in each case, but at the moment the framework that the Government have set out risks being confused.
	The reason this is important is that we have to have a proper way to learn the right lessons for the current framework for safeguarding children, because there are clearly current lessons to be learned. Obviously a series of child protection policies have been introduced since many of the events took place. Big changes include the Children’s Commissioners, strengthening the law repeatedly, new measures and policies on safeguarding in schools and social services, and the creation of CEOP. However, we all remain concerned that victims of sexual abuse, particularly children, are too often simply not believed or taken seriously enough—abuse that was ignored for too long against girls and young women in Rochdale very recently, as well as concerns that have been raised in Rotherham. We have also seen the forthcoming Children’s Commissioner’s report, which will raise concerns about wider child exploitation. We have raised concerns too about some of the policy changes that the Government have introduced, such as changes to vetting and barring arrangements and changes to the way in which CEOP will operate. Primary care trusts have also raised concerns about the way in which child safeguarding will be treated in the NHS as a result of the reforms.
	There are wider concerns, and lessons for today that need to be learned alongside the detailed historic investigations that rightly must take place. I know that
	the Home Secretary is deeply concerned by these crimes, and that she takes them extremely seriously. I therefore urge her to look again at the framework for these inquiries and at the possibility of a single overarching inquiry or review that would draw all the evidence together and consider what needs to be done to protect children now.
	It is extremely hard for the victims of child abuse and of sexual abuse against young people to speak out and to talk about crimes that are so intimate and so deeply disturbing, and they show great bravery when they do so. We need to show them that they will be listened to, that we will give them the support that they need and that everything possible will be done to protect children in the future as well.

Theresa May: I am grateful to the right hon. Lady for the approach that she has taken to these serious issues. It is right that we should work together across the House to find the best solution, not only to get to the bottom of anything that we have failed to uncover so far, but to support the victims—which, as she and I have said, is so important.
	In looking at these issues, it is right that we should first look into the police investigations to see whether any avenues that should have been followed were not pursued, and whether any issues have been uncovered as a result of the allegations that are now coming forward that should be dealt with. We must also pursue any criminality that comes forward, so that the victims can see that justice is being done.
	That is why I have put an emphasis on the police investigation, and on the NCA working with the North Wales police to look into the historic allegations and ensure that everything necessary was done. If there are any avenues to be pursued in any criminal investigations, I am absolutely clear that the police should take them wherever they go. It is important that the NCA’s director general should bring in various assets, including, crucially, the Serious Organised Crime Agency and CEOP. CEOP is renowned for dealing with these issues, and it is right that it should be the single point of contact for any fresh allegations that come forward.
	If, at the end of the processes that we have set in train, it appears necessary to move forward to a wider investigation, of course we will look at that. At this stage, we need to get the police investigations into any criminality under way, and to ensure that the Waterhouse inquiry did as it was intended to do, and did it properly. As I have said, however, if there is a case to be made for a wider inquiry at some stage in the future, we will of course look at the issue.
	I shall return to the point on which the right hon. Lady and I ended our statements today. She was right to say that other police investigations had taken place in which there were issues over whether the victims were believed. We need to be able to reassure victims that, when they come forward, they will be listened to and taken seriously. It is incumbent on all of us in the House, in the positions of authority and responsibility that we hold, to ensure that that is the case.

Tim Loughton: The Prime Minister is to be congratulated on the urgency with which he has responded to this matter, and the Home Secretary is to be congratulated on the speed
	with which she has come to the House today. Many weeks ago, when the Savile affair first reared its ugly head, I said that it was just the tip of the iceberg. We should not be surprised that child abuse has now raised its head in the political spectrum as well.
	As the shadow Home Secretary has said, we now have a multiplicity of inquiries, and the Home Secretary has just announced an inquiry about an inquiry. Rather than waking up to find a new institution involved in this mire every week, is it not now time to have an overarching and robust public inquiry into all the failings in child protection in various institutions—the BBC, the health service, the police, the Church and so on—during the latter part of the 20th century? All institutions involved with children and young people should be made to have a robust child protection policy that is fit for purpose in the 21st century. All perpetrators should be exposed and brought to book, and all victims should be given credence and closure at last.

Theresa May: I commend my hon. Friend, who has championed the interests of children and child protection throughout his time in this House. He has a worthy record of bringing these issues before the House and the public.
	My hon. Friend talked about bringing perpetrators to book, but as I said in my response to the shadow Home Secretary, what matters at this stage is that we are able to let the police do the job of identifying the allegations brought forward, pursuing the investigations and bringing perpetrators to book where possible. He has rightly said that this is not just an issue that has hit the care homes in north Wales, as the allegations of child abuse and actions of child abuse go wider in respect of the number of institutions involved in various ways over the years. As I said to the shadow Home Secretary, let us see the criminal investigation routes pursued, and if there is a case to go wider, of course the Government will look at that.

Paul Murphy: In February 2000, I was the Secretary of State for Wales and reported Sir Ronald Waterhouse’s report to this House of Commons. Does the Secretary of State agree that, although the report exposed monumental wickedness and came up with superb recommendations, including the creation of a Children’s Commissioner for Wales, and that however important it is to look at Sir Ronald’s inquiry, it is much more important to deal with the investigations into fresh allegations that are now before us? Secondly, will the Home Secretary assure the House that she is in close contact with Carwyn Jones, the First Minister for Wales, who is obviously also dealing with this issue, as social services are devolved?

Theresa May: I recognise that when the Waterhouse inquiry was set up and when it reported, it was generally welcomed in the House for the work it had done. Given the fresh allegations, however, I think it is important to ask somebody to look again at that work. Alongside it, what is of course important, as the right hon. Gentleman said, are the police investigations, looking into any fresh allegations that have been made and, as I say, looking at the historic allegations and investigations, too, to ensure that those were indeed conducted properly and went as widely as they needed to. As for the First Minister for
	Wales, my right hon. Friend the Secretary of State for Wales has spoken to him. As the right hon. Gentleman will know, policing is not a devolved matter, but there will be further discussions with the First Minister on a number of these matters, including the review of the Waterhouse review.

Edward Garnier: My right hon. Friend has just announced a number of inquiries, but I agree with the right hon. Members for Normanton, Pontefract and Castleford (Yvette Cooper)and for Torfaen (Paul Murphy) and with my hon. Friend the Member for East Worthing and Shoreham (Tim Loughton) in that there is a real imperative and priority for the police to get on with their job now, which is to investigate fresh allegations of criminality—and they must be left unhindered to do that, without being inhibited by other forms of inquiries into inquiries. I urge my right hon. Friend to allow the police to get on with that and, if necessary, to delay any inquiries into the inquiries so that the suspects can be prosecuted and, if necessary, found guilty, and the innocent can be relieved of the suspicion that is current in the media.

Theresa May: I thank my hon. and learned Friend for his comments. It is absolutely right that the police should be unhindered in their work of investigating any fresh allegations and, as I say, any historic allegations as well. If any charges are to be brought, the individuals need to be identified and criminal prosecutions pursued. The review into the Waterhouse inquiry will not, I think, get in the way of the police investigations, as it is a review into how that inquiry was conducted. It is right that the police are allowed and able to get on with the job. If people have committed horrendous crimes, we all want to see them brought to justice on the basis of the evidence and we want the criminality to be pursued.

Keith Vaz: I commend the Home Secretary for the speed with which she has acted on this issue. I remind her that when the children’s commissioner gave evidence to the Home Affairs Select Committee in its inquiry into Rochdale, she said that child abuse was happening in every town and city in this country. At the end of the day, I think the right hon. Lady is going to have to have a public inquiry—an overarching inquiry that brings all the strands together. In the meantime, will she assure us that the National Crime Agency will have this co-ordinating function with all the other inquiries that are going on? Will she please involve the Director of Public Prosecutions at the earliest opportunity. In the end, the victims want to see people prosecuted.

Theresa May: I thank the right hon. Gentleman for his comments. He has reminded us of the remarks made by the children’s commissioner when she came before the Home Affairs Committee. The director general of the NCA, Keith Bristow, working with SOCA, CEOP and any other assets he feels necessary to bring to bear at the invitation of the chief constable of North Wales, will primarily be looking into those allegations. If it is the case that other allegations surface in another context, which it would be appropriate to wind into the investigation, the director general of the NCA would, of course, be able to do that.

Julian Huppert: These allegations are indeed very distressing. In the original Waterhouse inquiry, 28 people were named but their names were not publicly reported because the judge reasonably assumed that it would prejudice any future trial—a trial that never happened. Does the Home Secretary agree that whenever there is an inquiry into what happened historically, as opposed to the recent allegations, it must get to the bottom of why there was no follow-up police investigation after Waterhouse concluded?

Theresa May: My hon. Friend is right. One point of bringing extra resource in to support the North Wales police on this issue is to look at the historic allegations and to investigate whether everything was done that needed to be done in respect of following up criminal prosecutions as well as ensuring that all the evidence was taken.

Elfyn Llwyd: I commend the Home Secretary for her statement today and the urgent action she has taken. I am very pleased that CEOP will be involved and that every extra resource will be there, if necessary. Some of these allegations, however, are not fresh; they were made during the proceedings of the Waterhouse inquiry. I believe that the right hon. Lady is right that a two-strand approach is vital and that the police should get on with it immediately. As to the inquiry itself, if the individual looking into it says, as others have said here today, that we need a further, overarching public inquiry, will the Home Secretary agree to it?

Theresa May: We will of course listen to any comments, remarks or proposals that come from the individual who looks into the Waterhouse inquiry, and we will treat them with the seriousness with which they should be treated.

David Davies: I welcome the fact that, following these serious allegations, the Home Secretary has acted very quickly indeed to investigate the specific problems in north Wales. Will she reaffirm that if anybody is found to have been involved in this, they can expect absolutely no mercy and that the full force of the law will be pursued in the courts?

Theresa May: I am sure that what we all want, especially for the victims, is that justice is done and seen to be done. As I said, it is for the police to follow any avenue of inquiry that they believe they should follow and to follow it without fear or favour.

Tom Watson: The lesson of Hillsborough and hacking is that a narrowed down investigation is the basic building-block of a cover-up. To limit this inquiry to north Wales and Savile would, in my view, be a dereliction of the Home Secretary’s duty. It would guarantee that many sickening crimes will remain uninvestigated, and some of the most despicable paedophiles will remain protected by the establishment that has shielded them for 30 years. Will the right hon. Lady please guarantee that the SOCA inquiry has licence to follow any lead it finds in what will be, after all, a serious criminal investigation. There should be no historic sexual abuse of children which is off limits to this
	investigation, and the police should be supported by a dedicated team of child protection specialists, many of whom have been raising their concerns for years. Whether someone was raped and tortured as a child in Wales or in Whitehall, they are entitled to be heard.
	The media may be transfixed by the spectre of a paedophile Cabinet Minister abusing children, but what actually matters are the thousands and thousands of children whose lives have been ground into nothing, who prefer to kill themselves than carry on, who have nowhere to turn, to whom nobody listens and whom nobody helps. Does the right hon. Lady sincerely want to start making amends, or can she live with being what she has just announced—the next stage of a cover-up?

Theresa May: I am sorry that the hon. Gentleman has chosen to take that tone. I know that he is keen to see the large-scale inquiry to which a number of Members have referred. I have explained why I think it important for the criminal investigation to run its course, and to be pursued without fear or favour. I assure him that what I, and the Government, want to do is ensure that we establish investigations, and that, if there are people who should be pursued for the purpose of prosecution, such a process then takes place. I have made that absolutely clear.
	It is entirely true that there have been a number of instances, over the years and across the country, of different forms of child sexual abuse. We now see the online and on-street grooming of children, and a number of other variations of child abuse. What is so horrific is the extent to which that abuse has been taking place in our country and throughout our communities over the years.
	There are various ways in which the police are investigating these matters and inquiries are taking place. In relation to the issue in north Wales, it is important for the police to be able to pursue any criminal investigations without fear or favour, taking those investigations, absolutely clearly, where the evidence leads them. That is what they should be doing, that is what they will be doing, and that is what I believe is the best way in which to bring justice to the victims.

Glyn Davies: Today’s statement concerned some of the most shocking incidents that I can remember occurring during my political life in Wales. Like others, I greatly commend the Prime Minister on the speed with which he established the urgent investigation.
	It may well be true that we must have the wide-ranging inquiry to which several Members have referred. However, we do not want to lose sight of the fact that there is an issue in north Wales that must be dealt with comprehensively. We must ensure that those responsible are brought to book quickly, and that we do not lose this particular shocking issue in a wider investigation that will take a long, long time.

Theresa May: I share my hon. Friend’s concern. As a number of other Members have pointed out, we need to ensure that the police are able to investigate, to do that speedily, and to ensure that anyone who should be brought to justice is indeed brought to justice.

Mark Tami: Does the Home Secretary agree that one of the fundamental flaws in the Waterhouse inquiry lay in its terms of reference? That is why we need a far more widespread inquiry.

Theresa May: The review of the Waterhouse inquiry will examine, among other issues, the way in which that inquiry was constituted. However, I believe that at the time when the terms of reference were set, the entire House was comfortable with them.

Rob Wilson: I, too, welcome my right hon. Friend’s swift action, in relation to both the independently led review of the Waterhouse inquiry and the involvement of the National Crime Agency, which I think is very important. Does she agree that all the evidence collected by “Newsnight”, by the Bureau of Investigative Journalism and by others should be placed in the hands of the police immediately? That is absolutely essential if justice is to be delivered not only to the victims, but to those who have been unfairly libelled on the internet in recent days.

Theresa May: That is a very valid point. I would encourage all who have any evidence or any allegations of child abuse to put that evidence or those allegations before the police. It is for the police to investigate, and to take evidence where it leads.

Simon Danczuk: There has clearly been institutional blindness to abuse, whether it has taken place in Rochdale council, at the BBC or even within political parties. We now need a Government framework that encourages all victims to come forward, whatever cases are involved. Does the Home Secretary not agree with that?

Theresa May: I am happy to repeat what I said in my statement, and also a minute or so ago. I think that anyone who has been a victim and who feels that there are allegations to be made should make those allegations, but I also think that such people should go to the police, who should be investigating the allegations and ensuring that we can, where possible, bring the perpetrators to justice.

Graham Stuart: Tomorrow, after a year-long inquiry, the Education Committee will produce its report on child protection in England. There has understandably been a great deal of focus on the perpetrators in recent weeks, but we focused unapologetically on the victims. May I ask the Home Secretary to look at the report carefully? What is most important—even more important than bringing people to justice—is ensuring that no child suffers as children suffered in past years when, overall, the system let them down.

Theresa May: I will, of course, look at the Committee’s report carefully. As my hon. Friend says, we often concentrate on the perpetrators. We hope that part of that involves giving the victims an opportunity for justice, but concern for the victims must also drive what we are doing.

Ian Lucas: I thank the Home Secretary for coming to the House so promptly, but the problem with what she has said today is that the victims have heard what she has said in the past. They gave evidence to the Waterhouse inquiry, but that evidence was not listened to and did not become public, and no prosecutions—or not enough prosecutions—followed. What can the Home Secretary do to assuage the feelings of those victims, and to make them understand that this inquiry will actually lead to the taking of some responsibility? Is it not about time that we had openness, after all these years, about the evidence that was given to the Waterhouse inquiry?

Theresa May: I would say to anyone who has been a victim and is concerned about what has happened in the past that the whole point of setting up a police investigation under the director general of the National Crime Agency is to enable a body of police to look into the investigations and inquiries that took place previously, and to establish whether they were properly conducted or whether avenues of inquiry or allegations that should have been pursued were not pursued, in order to identify instances in which it will be possible to bring perpetrators to justice. This is not just an inquiry into what has happened; it is a police investigation, and it will focus on precisely that issue.

John Hemming: On 26 October, the Government voted down proposals to make cover-ups harder and to protect children in care. What measures do they propose to ensure, in particular, that people have a right to complain to someone independent?

Theresa May: The hon. Gentleman has led me on to territory that is not fully within my remit, but I can say that one of the messages we hope will be conveyed by the action we are taking today is that people who make serious allegations will be listened to and taken seriously, because that issue has arisen in many areas. We want to ensure that people do not feel that they cannot come forward because they will not be taken seriously or because action will be taken against them, and that when child abuse has taken place, it is uncovered and dealt with properly.

Mark Durkan: Is the Home Secretary asking the security services to review and, where appropriate, share any intelligence that they have relating to cases and places of abuse and to the persons, networks and patterns involved, not just in north Wales but—as other Members have suggested—more widely, including, but not only, in respect of Kincora?

Theresa May: The National Crime Agency, whose investigation will take place at the request of the chief constable of North Wales police, will pursue whatever avenues they need to pursue to ensure that they can take an appropriate approach to bringing perpetrators to justice.

Paul Beresford: Does my right hon. Friend agree that many fresh allegations could come from individuals who have hidden the appalling attacks made on them so many years ago, and who will be reluctant to come forward because that would disturb
	the life that they have built since? Do such people not need the reassurance and protection that can be provided by CEOP, the police and others if they do come forward?

Theresa May: That is an important point. For many victims who wish to come forward, it will not be an easy process but a very painful process, which, as my hon. Friend says, could disrupt the lives that they have been able to build subsequently. However, I assure him that CEOP is well able to deal, and well used to dealing, with people who are in difficult circumstances and who may find it difficult to come forward. That is why I think it so important for CEOP’s ability and specialism to be brought to bear on the investigation.

Joan Walley: Given what we now know about the powers of investigation and terms of reference used in the north Wales inquiry, will the Home Secretary have regard to other similar inquiries? I am thinking in particular of the Staffordshire “pindown” inquiry undertaken by Allan Levy. Can the Home Secretary assure the House that if similar questions arise in relation to any other inquiry, they will be encompassed within any further investigations?

Theresa May: If there are similar concerns about any other inquiries, we would look at them on a case-by-case basis and consider the appropriate way of dealing with them.

Karen Lumley: I was a Clwyd county councillor representing Wrexham at the time of the north Wales children homes inquiry, and I was on the panel that looked at the report that was never published. Let me tell the House that its contents were horrendous. Can the Secretary of State assure me and the House that no stone will be left unturned to make sure that the people who came forward can have closure and that those responsible for these dreadful crimes can be punished?

Theresa May: I am grateful to my hon. Friend for sharing her personal experience with the House, and I assure her that no stone will be left unturned. The entire House wants to see that justice is done.

Geraint Davies: Will the Home Secretary look into whether there was a systemic problem in north Wales whereby those accused of child abuse without conclusive evidence to prove it were redeployed within the wider world of social services? Although they no longer had direct access to children, they were still part of that system. If that is the case, we will need a much wider inquiry.

Theresa May: One issue that has been raised both in the past and more recently is the question of whether the inquiries went sufficiently far outside the care system. As the police look at the historical allegations, they will also consider how far the investigations should go.

Tony Baldry: One of the major concerns in all this is the number of credible claims of child abuse that were made to the police about Savile and others that never resulted in charges being brought.
	Will my right hon. Friend give an undertaking that the work done by HMIC will lead to a report that the House will then have a chance to debate?

Theresa May: My hon. Friend raises an interesting point. I am sure the House will want to return to this issue either in relation to the HMIC report or anything further that comes out of the investigations being set up today. One issue HMIC will be looking at in a number of forces is whether the police respond properly to these sorts of allegations. As a number of Members have said, one of the more general concerns is that victims often find it difficult to be heard, or do not come forward because they do not think they will be listened to.

Yasmin Qureshi: As a former prosecutor of historical sexual abuse cases in care homes and institutions, as well as within the family, I informed the House in a debate some months ago that sexual abuse of our young people is very common and much more prevalent than we appreciate. We need not only an inquiry into any abuse that has been taking place in care homes or other institutions but to take a proper look at what we should do to protect our young children in the future and what rules we should put in place to make it easier for young victims to come forward and tell us what has happened to them. I repeat that it is not only care homes that have sexual abuse problems; there are also sexual abuse problems in the home and the family.

Theresa May: I acknowledge the hon. Lady’s experience in this area, and she raises an important point about the extent of such abuse and the scenarios in which it takes place. She says we should look at the broad issue of child protection. She will have heard my hon. Friend the Member for Beverley and Holderness (Mr Stuart) informing the House that the Education Committee will publish its report on child protection tomorrow, and I am sure the whole House will want to look at that issue very seriously.

Jackie Doyle-Price: As my right hon. Friend may be aware, rape crisis centres are reporting a considerable increase in activity as victims of historical abuse come forward. While it is welcome that people are responding to how seriously we are all taking these allegations, we do not want to be unable to right the wrong they have suffered by not being in a position to give them adequate support. Will she make sure that the infrastructure we have in place to support rape and abuse victims is satisfactory and supports them to get closure?

Theresa May: I recognise the problem my hon. Friend raises, and only last week I heard directly from representatives of rape crisis centres about the increase in the number of historical victims coming forward. The Government have been able to provide some extra funding for rape crisis centres to put them on a more stable footing and to open some new centres, but I recognise that there are issues in respect of their ability to handle the volume of people coming forward and also the appropriate way to deal with them, as many of the recent therapies have not always satisfied the needs of some of those victims.

Paul Flynn: One of the boys involved in this case was persuaded to give evidence only to find that, after going through the horror of churning up the memories of the dreadful things he had suffered, there was no justice at the end of it. He later took his life. I know that the hard-bitten reporters who persuaded him to give evidence on the promise that there would be justice have lived with that sense of injustice ever since. I ask the right hon. Lady to look not only at the fresh evidence but at the evidence that was available at the time and that was almost certainly suppressed by powerful people. Will she look at the evidence produced by Paddy French and the Rebecca Television website on an edition of “Wales this Week” that was never broadcast?

Theresa May: The police investigation will look at the evidence that was available at the time in these historical abuse allegations, and at whether the evidence was properly investigated and whether avenues of inquiry were not pursued that should have been followed up and that could have led to prosecutions. I can therefore say to the hon. Gentleman that the police will, indeed, be looking at that historical evidence. That is part of the job they will be doing.

Nicola Blackwood: I, too, welcome the Home Secretary’s decision today. Does she agree that if there is a single message that must go out from all these inquiries and investigations it is that all victims of child abuse or sexual exploitation who come forward will be believed? Even if there is a successful police investigation and even if the Crown Prosecution Service decides the victim is a credible witness, too often they feel that they are treated like the criminal in court. Will the Home Secretary work with the Director of Public Prosecutions to make sure all special measures are implemented so that that does not happen in any prosecutions that come out of this inquiry?

Theresa May: I am very happy to raise that issue with the Law Officers in relation to what happens in court. We have made considerable progress in dealing with victims of these crimes in court, but I recognise that some still find it very difficult to give evidence, and without that evidence the prosecution is often not possible.

Paul Goggins: I also welcome the statement and the speed with which the Home Secretary has made it. In recent days she and her officials will have rightly been in close discussion with North Wales police about the work to be done by Keith Bristow, and it is very welcome that the Home Office is offering financial support. When serious issues such as these have to be dealt with in future, what role will police and crime commissioners have in discussions between the Home Office and local police forces? What part will they play in making decisions about future action?

Theresa May: The police and crime commissioner will replace the police authority. There will be certain circumstances in which it is right, as it would have been for the police authority, for the commissioner to be part of initiating a particular piece of work. There will be other circumstances in which it is entirely right for the chief constable to do that.

Stuart Andrew: I welcome the statement. As a Leeds MP, it has been sad to see how the Jimmy Savile allegations have rocked people’s trust. As a councillor in Wrexham at the time of the inquiry, I remember how it sent shockwaves throughout the community. Even after the inquiry, there was considerable angst among people in the area about the appalling things that had happened. My right hon. Friend has rightly encouraged anyone with accusations to come forward, but there were rumours at the time of people who were too frightened and anxious to do that because of the exposure it may have given to their family and the complete lack of trust they had in the authorities who were supposed to be looking after them in the first place. Can she assure me that those who do come forward will be listened to without fear of recrimination and that everything will be done to support them through a very difficult process?

Theresa May: Yes, I can give my hon. Friend that reassurance. This is why it is particularly important that the single point of contact for people will be CEOP, which has the experience of and expertise in working with victims of these appalling crimes. CEOP has the ability to work with those who find it difficult to come forward, and it will enable them to do so in a way that allows their story to be heard and listened to.

Madeleine Moon: As a former social worker who worked in child protection in Wales, I welcome the statement, but if this is to be a successful examination, we have to look at the reasons why this was able to happen and what the lessons are for today—the lessons will go wider than just the Home Office. May we have an assurance that there will be an examination across Departments as to why we continue to place vulnerable children away from their home areas, and away from their families, their friends and the support networks they trust, where they can have the assurance that if they go back to those networks such revelations will not be buried and hidden? We are failing generations of children by still placing them far away from their families because of cost and because we no longer have local authority children’s homes in which places can be found for vulnerable children.

Theresa May: The hon. Lady raises a wide issue about the way in which we treat children and young people who are in care and are the responsibility of the state. Sadly, this country has an appalling and shameful record on the way in which we have dealt with young people in care, across a range of issues. Obviously, the points that she has made will be noted by my right hon. Friend the Secretary of State for Education, under whose remit this primarily comes.

Nick Smith: Will the Home Secretary tell us more about the terms of reference for the appointee who is looking into whether the Waterhouse inquiry did its job? Surely these must be as wide as possible, given this dreadful case.

Theresa May: I am not able to give the terms of reference at this stage. Wide discussions are being held, including, as I understand it, with the Opposition, about what those terms of reference should be.

Susan Elan Jones: I am grateful to the Home Secretary for coming to the House to make the statement and to my right hon. Friend the shadow Home Secretary for calling for a single overarching inquiry, as I believe there will be a great deal of support for that in north Wales, as well as in other places.
	Most of us cannot even begin to imagine the pain that many victims of this dreadful abuse will be going through today. They will be watching and reliving some of their experiences, which, in many cases, may have been buried for decades. The hon. Member for Pudsey (Stuart Andrew), a former Wrexham councillor, raised this point eloquently. My concern is that many people would like to go to the police to say what happened to them but they fear that the perpetrators are much more powerful than they are. They want to know that we will be on their side. If any Member of the House of Lords were found to be guilty and to be a perpetrator, would the Government support stripping them of their peerage and taking them out of the House of Lords for life?

Theresa May: Obviously, what would happen to any individual who was found to be a perpetrator following any potential criminal prosecution is a matter that would need to be determined at the time. I think that the whole House shares a view on the valid point that the hon. Lady makes about those who fear that they will not be heard; we in this House have responsibility, authority and power, and we should make sure that the message that goes out from us clearly today is that victims will be heard. If someone has been a victim and has allegations to make, I ask them please to bring them forward and take them to the police. The purpose of the investigation is to ensure that we follow all avenues of inquiry, and that victims can see that their voice is heard, that they are listened to and that, where possible, perpetrators are brought to justice.

Chris Ruane: The Secretary of State said that she has not had direct contact with the First Minister of Wales, Carwyn Jones. May I suggest she does make contact with him and also with the Children’s Commissioner for Wales to ensure that there is full co-operation and the free flow of information across all UK borders—those of England, Scotland, Northern Ireland and the Channel Islands—in a Welsh inquiry or in an overarching UK inquiry?

Theresa May: As I understand it, a number of conversations are being held with the First Minister in Wales—as I indicated earlier, the Secretary of State for Wales has already been in touch with him. I think there will be discussions about the nature of the review of the Waterhouse inquiry as part of that. Of course, as instances emerge—as allegations are made and victims come forward—it will be necessary to ensure that there is an exchange of information in the investigations. One benefit of being able to bring the director general of the National Crime Agency, along with the assets of SOCA and CEOP, and other force assets, as necessary, into this investigation is to make sure that all the information sharing that is necessary is done.

Stephen McCabe: Keith Bristow is a very highly regarded senior police officer but, as he told the Home Affairs Committee the other week, he is already up to his neck in another serious,
	high-profile police investigation and he is also trying to establish the National Crime Agency. Is the Home Secretary absolutely confident that he will be able to give this matter the full attention that it obviously demands?

Theresa May: Yes, indeed I am. This investigation provides a good example of the benefits of having a central authority—a central body—that can draw resource from a number of areas, particularly the specialist resource from CEOP and SOCA, and bring that to bear. Before the invitation came from the chief constable of North Wales police we of course discussed with Keith Bristow his ability, and that of the various assets under him, to undertake this, and he is clear that he is able to do so.

Ann Coffey: I, too, thank the Home Secretary for her statement. There is a wide difference between police forces in not only how they respond to allegations of child sexual exploitation, but how well they currently assess risks to children in their area. What has happened to these children in the past is terrible and we must do all we can to ensure that we safeguard children from sexual abuse. Does she agree that Her Majesty’s inspectorate of constabulary should make it a priority to inspect police forces to see how well they safeguard children in their area?

Theresa May: One issue that HMIC will be examining in its work on Savile and on the lessons learned from this north Wales investigation and, if necessary, others, is how the police deal with these matters. One of HMIC’s tasks will be to ensure that forces are taking those lessons seriously and embedding them in what they do. Of course, once the college of policing is up and running, it will also be a body with responsibility for developing standards and good practice in a number of areas, and I would expect this to be one of those areas.

Jim Shannon: I, too, thank the right hon. Lady for today’s statement and for the speed with which the Government have brought it to the House. As is clear from the Jimmy Savile abuse and the north Wales care home abuse, paedophile groups were prevalent in many parts of the United Kingdom in the 1970s and 1980s. Organisations that give help to abused children are almost being overwhelmed by the phone calls they are receiving—they are reporting a 100% increase in calls for help from young children. What assistance can she give organisations tasked with helping these vulnerable children?

Theresa May: The hon. Gentleman makes a valid point about the number of people now coming forward. As more revelations of a historical nature are made, I hope that people will feel better able to come forward to indicate their concerns and the problems they have been dealing with in their lives. As he says, a number of organisations are working with and helping those children. The issue of child protection is one that this House and the Government have taken and will continue to take seriously in terms of ensuring not only that there is child protection in the first place, but that when there are victims they can come forward and are given the support they need.

Cathy Jamieson: I served as a member of the inquiry team that looked into and reported on abuse of children in residential care in Edinburgh and it was some of the most harrowing work I have ever done. From that experience, I am very aware of how difficult it is for victims to come forward. I appreciate the importance of CEOP, as well as what the Home Secretary is saying about the police, but many victims will fear that they will not be believed or will worry that they will be let down again. What resources will she put in place for social services departments, the voluntary sector and counselling organisations to enable people to come forward, tell their stories and be supported throughout, whatever action is taken?

Theresa May: It is not for me to put resources into social services departments, as that is obviously another area of responsibility, but we will be considering the issue across Government. I hope that the message that has gone out from this House today to reassure victims that they will be listened to will be heard and that people will have the confidence to come forward. The hon. Lady’s point about wider support for victims has been raised by a number of other Members and I will ensure that it is considered by the responsible Departments.

Bill Esterson: The Education Committee heard worrying evidence that there is still a big problem with older children not being listened to or believed because of what is regarded as difficult behaviour. That is consistent with what happened in Rochdale and with what a number of other Members have said. Notwithstanding that, does the Home Secretary agree that it is very important for child protection to have greater co-operation between the police and other agencies so that children are put at the centre of all child protection work?

Theresa May: The hon. Gentleman makes an important point about co-operation at a more local level in responding to cases involving individual children. All the evidence suggests that the best protection and results happen when agencies work together and when not just one single agency considers the protective needs of a child. He makes an interesting point that we will take away and consider.

Point of Order

Huw Irranca-Davies: On a point of order, Mr Speaker. Ash dieback disease is a major national disaster of huge proportions, and of direct and immediate interest to every hon. Member of this House. It is therefore disappointing to learn that the Secretary of State for Environment, Food and Rural Affairs has written a detailed letter updating hon. Members on this environmental emergency, but that the letter has been exclusively distributed by the Government Whips’ admin unit to Government—governing party—MPs only.
	As you are guardian of the rights of this House, Mr Speaker, I seek your guidance on the appropriateness of a Secretary of State, in a moment of great national emergency, seeking to use the functions and resources of the private office to exclusively brief only his own party colleagues. Surely every hon. Member of this House is equal in their standing and equal in their need to hold the Executive to account.

Mr Speaker: I am grateful to the hon. Gentleman for his point of order. If Ministers acting as Ministers with the support of the civil service are making information available to hon. and right hon. Members of this House, they should without question do so equally. That requirement does not of course apply to political parties making information available to Members of the House. I hope that that distinction is clear and intelligible to the House. I cannot have a debate with the hon. Gentleman about it and there is no requirement to do so, but if he is seeking genuine clarification—his brow is furrowed in such a way as to suggest that that is so—I shall briefly indulge him.

Huw Irranca-Davies: Thank you, Mr Speaker, and I do not intend to detain the House any longer than I need to. Further to that point of order, the letter is signed not by a party political unit but by the Secretary of State in name as the Secretary of State for Environment, Food and Rural Affairs. If I were to share the letter with you, Mr Speaker, perhaps you could offer some clear advice on whether it falls within the remit of the civil service or party politicking.

Mr Speaker: I am grateful to the hon. Gentleman for his follow-up point of order. I have not had sight of the letter and I am happy to look at it, but I do not think that I need now to add to anything that I have said.

Free School Meals (Children Over the Age of 16)

Motion for leave to bring in a Bill (Standing Order No. 23)

Nicholas Dakin: I beg to move,
	That leave be given to bring in a Bill to make provision to introduce free school meal arrangements for children over the age of 16 who attend colleges to bring them into line with arrangements for children who attend schools, academies and free schools; and for connected purposes.
	Free school meals are a vital tool in ensuring that all students have access to education regardless of their background. More than 100 years have passed since Campbell-Bannerman’s Liberal Government gave local councils the power to give free meals to children from poor families. It was the great 1944 Education Act that made it an entitlement for children to have a free school meal. Consequently millions of young people, for over a century or more, have benefited from free school meals, which has increased both access to education and social mobility.
	The situation today, however, is not entirely satisfactory as there remains a significant inequity in the provision of free meals for the over-16s. Students who meet eligibility requirements can claim free school meals if they attend school sixth forms, academies, university technical colleges or free schools, but their contemporaries at sixth-form colleges and further education colleges cannot. That long-standing injustice is an issue that I have raised continually since my election to this House two and a half years ago.
	Along with MPs from all parties, I contributed to a Westminster Hall debate in June led by the former Education Secretary, my right hon. Friend the Member for Sheffield, Brightside and Hillsborough (Mr Blunkett). The strong concern expressed by all Members from both sides of the House in that debate demonstrated the breadth and depth of support for addressing the injustice. From my 30 years’ experience of working with post-16-year-olds and four years as principal of John Leggott college in Scunthorpe, I know the direct impact that not having access to a college meal in the daytime has on concentration, attendance, retention, achievement and, inevitably, a young person’s progression on to other things.
	Free school meals should be available to those who need them regardless of where they choose to study. If the eligibility of students who meet the criteria for free school meals depends on the type of institution they attend, that is not only morally wrong but potentially piles disadvantage on top of disadvantage. The fact that 16 to 18-year-olds in colleges miss out is particularly unfair when 13.3% of them are from disadvantaged backgrounds compared with 8.3% in maintained school sixth forms and academies.
	It gets worse, because some areas of the country are served more heavily by colleges for post-16 education than by schools, which means that young people lose out through a postcode lottery because of where they live. That injustice affects not just a minority of students, but a significant proportion. Across the country, some 103,000 students are missing out on a free lunch to which they should be entitled. In Yorkshire and the
	Humber, that is 10,700 students, including 257 students who attend Scunthorpe’s North Lindsey college and 103 students who attend Scunthorpe’s John Leggott college.
	There are three reasons why there is greater urgency now about addressing the injustice than hitherto, and why the Association of Colleges’ campaign “No Free Lunch?” on fairness for FE students is so timely and deserving of our support. The landscape has been transformed, first by the scrapping of the education maintenance allowance, secondly by the raising of the participation age to 17 and then to 18, and thirdly by the increasingly fragmented nature of post-16 provision.
	The existence of EMAs masked the disadvantage of being unable to access free school meals. With the EMA gone, the injustice is even starker. The raising of the participation age will mean more students from disadvantaged backgrounds will stay on beyond 16, and they deserve to be supported with a free school meal, if they are eligible, whichever institution they study at. Why should new institutions like free schools, academies and UTCs be able to provide free school meals while FE and sixth-form colleges cannot?
	The availability of free school meals at some institutions but not others not only damages the education and well-being of individuals, but promotes division in the education system. Let us take as an example the bizarre situation in Hackney, where a UTC opening on the same site as the college can offer free school meals to its students while the college cannot. Let us also look at an example of the real-life impact of this unfair policy on young people. Ryan Ashton attends Lancaster and Morecambe college, and is seven months into a two-year level 3 national diploma in sport. Despite being eligible for free lunches at school, he was shocked to find when he began college that he was no longer eligible to do so. As he is studying sport, his day can be very physical, and when he has not had enough to eat he can feel faint and dizzy. There is a family history of diabetes, so good diet is particularly important. He says:
	“I do think this campaign is very important. I know I’m not one of the worst off, but still need some support. I think there needs to be help for students like me.”
	To afford his lunch, Ryan works as a football referee, and also uses this income to fund his travel.
	This is a story that will resonate with thousands of students who are forced to take on part-time jobs or go to other additional lengths just to be on a level playing field with their counterparts in school sixth forms and academies. That is completely at odds with the Government’s commitment to social mobility and equal opportunity, which is why the urgent action sought by the Bill is needed. Another consequence of the current injustice is that colleges have to fund free school meals out of their own squeezed budgets. Last year, North Lindsey college in Scunthorpe spent £5,000 on providing meals for students in particular need. At a time when all education institutions have to cut costs, why should some be forced to pay for free school meals and others not?
	Anne Tyrell, principal of North Lindsey college, says:
	“There is a wealth of educational research that demonstrates that effective learning can only take place once basic needs are satisfied (food being one of these). There is no justification for the fact that students in colleges do not have the same right for a free
	school meal say they would if they had stayed on at a school sixth form. As real family incomes are reduced, and combined with the removal of EMA, there is even more need to ensure that at the very least there is parity on the issue. This may seem a small step but it is essential if we are to truly widen participation and ensure social mobility and access to education, training and qualifications for all our young people.”
	The lifetime public finance cost of young people aged 16 to 18 not participating in education, employment or training is estimated to be at least £12 billion. There is also a significant cost to individuals of not participating and therefore not securing skills and qualifications. The estimated cost of extending the right to free meals to college students is £38 million in the Department’s overall budget of £56 billion. That is the equivalent of 1p in every £14 spent, so the numbers add up and make good business sense. The Government could use the review of eligibility for free school meals under universal credit to consult on reviewing the eligibility for institutions to provide that to the qualifying demographic.
	Toni Pearce, National Union of Students vice-president for further education, said:
	“There can be no justification for the basic inequity which says that you can’t get free school meals if you study at a college from the age of 16 to 18, but can if you study at a school sixth form. Eligibility for free meals should clearly be based on need—not on where you choose to study.”
	Janet Grauberg, UK director of strategy for leading children’s charity, Barnardo’s, said:
	“Even the Secretary of State for Education has acknowledged this anomaly, which means the most disadvantaged students are penalised for choosing to study in a further education college rather than a school sixth form.
	We now need action, not words, to stop this happening. Barnardo’s report, ‘Staying the course’, found some of the poorest students are skipping meals just to afford the bus to college. We fully support AOC’s No Free Lunch? campaign and urge the Government to correct this disparity as soon as possible.”
	As part of its investigation into 16 to 19 participation in education, the Select Committee on Education unanimously concluded:
	“There is no logic in making free school meals available to 16-18 year olds in schools but not in colleges”.
	The case for extending the right to free school meals is clear-cut and compelling, and I believe that the Government acknowledge the need to address it. In a very positive meeting with representatives of sixth-form colleges and with me last month the Secretary of State recognised the need to look seriously at this issue. In a recent written answer, the Minister for Schools accepted that it was a long-standing anomaly and said that the Government were working through the available options. I hope that the option in this ten-minute rule Bill is one that he will grab with both hands.
	Question put and agreed to.
	Ordered ,
	That Nic Dakin, Mr David Blunkett, Sir Roger Gale, Sir Bob Russell, Caroline Lucas, Angela Smith, Caroline Dinenage, Mr David Ward, Jim Shannon, Yvonne Fovargue, Robert Halfon and Ian Swales present the Bill.
	Nic Dakin accordingly presented the Bill.
	Bill read the First time; to be read a Second time on 1 February 2013 and to be printed (Bill 87).

Standards and Privileges

Andrew Lansley: I beg to move,
	That this House
	(1) approves the Second Report from the Committee on Standards and Privileges (House of Commons Paper No. 635);
	(2) endorses the recommendation in paragraph 62; and
	(3) notes that Mr Denis MacShane has been disqualified as a Member of this House.
	The report by the Standards and Privileges Committee into Mr MacShane’s conduct describes it as
	“the gravest case which has come to us for adjudication, rather than being dealt with under the criminal law”.
	This was deeply reprehensible conduct, including, as the report says, actions “plainly intended to deceive.” That will have angered many of our constituents and Members of this House alike.
	In this House, we are determined to meet the highest standards in public life. The events that were the subject of the complaint against Mr MacShane took place between 2005 and 2008. Since the expenses scandal three years ago, we have instituted measures to seek to rebuild trust in our procedures and in Members themselves. The Parliamentary Standards Act 2009 provides for an offence of providing false and misleading information to the Independent Parliamentary Standards Authority. This is designed to ensure that anyone submitting false invoices now would be caught and could be prosecuted.
	We are committed to ensuring that such behaviour could not take place now or in the future, but we must recognise that independent scrutiny and enforcement is not enough. We should expect Members of the House themselves to set and meet the highest standards of conduct. That they have not is a matter of deep regret, and in this House I know we will be determined to demonstrate that we will not tolerate such lamentable breaches of those standards. We must make it clear that such breaches will be dealt with seriously and proportionately. It is in pursuance of this that I have moved the motion.
	Mr MacShane has sought and secured disqualification from the House. The motion notes this, but none the less approves the report by the Committee on Standards and Privileges and its recommendations. To do so will establish that the House would act against Members on the basis of the Committee’s report and the Commissioner’s inquiries and conclusions. It may be that Members will not wish to debate in detail the findings of the report and investigations by the Parliamentary Commissioner for Standards, recognising that any possible further action now lies outside this place. None the less, in my view, it is important that we put the endorsement by the House of the Committee’s report on the record.
	The Chair of the Committee will wish to explain its conclusions and recommendations in further detail, but I should like to put on record our thanks to him and his Committee, and to the Parliamentary Commissioner for Standards, for their work in this case, and for their continued work in the House. It has been the practice of this House to endorse the findings of the Committee on Standards and Privileges, and I invite hon. Members to do so today.

Angela Eagle: May I add my thanks to my right hon. Friend the Member for Rother Valley (Mr Barron), the Chair of the Standards and Privileges Committee, and to the other members of the Committee for the work that they have done on the report?
	I rise following the speech made by the Leader of the House to support the suggestion in the motion before us today that:
	“This House approves the Second Report of the Committee on Standards and Privileges…and endorses the recommendation in paragraph 62.”
	The motion before us goes on to point out that the former Member of Parliament for Rotherham took the decision to resign his seat after he was made aware of the content of the Committee’s report on its publication last Friday. His own stated reason for doing that was that it was right that he should take responsibility for the mistakes that he has made and be accountable for them by leaving Parliament. We believe that in these circumstances he has done the right thing. His resignation emphasises the importance of respecting the rules for claiming reimbursement of expenses incurred by Members of the House in the performance of their Parliamentary duties. It is crucial that the public have confidence in these arrangements, too.
	The report deals with claims made between 2004 and 2008. Therefore, they relate to the system that was in place prior to the creation of the Independent Parliamentary Standards Authority. This has led, as the Leader of the House pointed out, to a much more robust and transparent system that minimises the chances of such abuses occurring in the future. This sorry episode will serve to reinforce both the importance of the rules and the gravity with which serious breaches are regarded by this House.

Kevin Barron: I will be very brief. The Committee’s report sets out the circumstances of the case clearly. The inquiry related to claims made between 2005 and 2008 under the old expenses system. I cannot be certain that this is the last of the expenses scandal, but I hope that it is.
	On a personal note, I have known Denis MacShane since he was first selected to contest a by-election in Rotherham in 1994. I have worked with him as one of the three MPs in the borough since then and know he has always had the interests of his constituents, and the wider Rotherham borough, at heart. The events of the last three years will not totally overshadow my memory of the work that Denis has done in Rotherham.
	The Committee, however, was united in its finding that this was the gravest case that has ever come before it. The absolute sums were not the issue; it was the manner in which they were claimed, the flagrant disregard for the rules of the House, and the failure to co-operate with the commissioner’s investigation that most concerned the Committee. We judged that to be a breach of the code of conduct. There may have been suggestions that hon. Members are above the criminal law. That is not true, and that needs to be addressed.
	The commissioner’s investigations are into possible breaches of the code of conduct, not criminal matters. The procedures are fair, but the commissioner is not
	conducting a criminal investigation and neither is the Committee. As we said in the report:
	“The decision as to whether conduct is criminal and as to whether proceedings should be brought is one for the police and the CPS.”
	In 2008, the Committee, the Parliamentary Commissioner for Standards and the police agreed that criminal investigations should take precedence over the House’s disciplinary proceedings. For that reason, we agreed in 2010 that the case should be referred to the police, and the commissioner referred it. After a long investigation, the police and the Crown Prosecution Service decided not to proceed. They doubtless considered that decision very carefully. They now have our report and may consider it again. That is their decision, not ours.
	If our report contains new material, the police can use it to guide their investigations. Receipts, invoices and claims are not privileged, and do not become so simply because they are reproduced in a parliamentary report. It is true that the correspondence between the commissioner and those he investigates could not be used in court proceedings without impeaching and questioning proceedings in Parliament. It is our view that that would be a breach of article 9 of the Bill of Rights. In reality, however, that correspondence is likely to be inadmissible anyway. There are strict legal safeguards about the gathering and use of evidence in criminal proceedings. The House’s disciplinary procedures are scrupulously fair, but they are disciplinary processes, not criminal investigations. It would be most unwise of the House to speculate on the criminality of an hon. Member’s conduct.
	The Committee has given its judgment on breaches of the code, and the House is invited to agree. Whether or not conduct like that described in our report is criminal, it is clear that we will not tolerate it. I welcome that, and I hope that the House agrees.

Paul Beresford: Clearly, as a member of the Committee I support the findings and I support the motion. I do not want to go through the report, but I just want to raise an issue that comes from it. The commissioner’s inquiry was in two parts. The first included a measure of co-operation from the Member in question combined with research into retained files. That evidence was sufficient for the Committee to decide to pass further inquiries to the police, which we have already had explained to us. The second half was subsequent to the police investigation. This time the Member refused to co-operate and a fuller investigation was partially blocked. It is a requirement of the House that Members co-operate with the commissioner. There is no fifth amendment; co-operation is expected. It is the very often core of the inquiry for the commissioner to have that response and co-operation.
	I have not been a member of the Committee for very long, but I understand that there has been at least one case, and perhaps more prior cases, where a Member has refused to co-operate. In at least one case, the House imposed a suspension after which the Member returned to the House, leaving the Committee with an unsatisfactory report and no real resolution. This is a concern that the Committee and the House should
	look into, because I suspect that this will not be the last occasion when this type of reaction to the commissioner will happen.

Michael Connarty: It is with some regret that I raise, on behalf of my constituents who have raised it with me—this is not to mitigate anything in respect of the report and the actions of Denis MacShane—the question of why there seem to be double standards. The Minister for Schools, the right hon. Member for Yeovil (Mr Laws), was clearly guilty of falsely claiming £60,000 of House expenses and has been returned to the Cabinet, yet other Members have been recommended for expulsion from the House.

Mr Speaker: Order. I think the hon. Gentleman has concluded his remarks, but they were outside the terms of the motion. Of course, if he wanted to pursue the matter, it would require a substantive motion.
	Question put and agreed to.

European Union (Croatian Accession and Irish Protocol) Bill

[Relevant document: The Seventeenth Report from the European Scrutiny Committee, on Croatia: monitoring the accession process, HC 86-xvii.]
	Second  reading

David Lidington: I beg to move, That the Bill be now read a Second time.
	I convey the regrets of my right hon. Friend the Foreign Secretary who is unable to attend today’s debate. As you know, Mr Speaker, he is in Laos today attending to official business on behalf of Her Majesty’s Government.
	The Bill provides for parliamentary approval of the Croatian Accession treaty and for a protocol on the concerns of the Irish people, the so-called Irish protocol, which is to be added to European Union treaties. The Bill also provides for the secondary legislation that will be required to apply transitional immigration controls on Croatian nationals exercising their right to free movement once Croatia accedes to the European Union.

Henry Smith: I very much welcome those transitional immigration controls that will be imposed for the accession of Croatia. We learned from that mistake in 2004 when countries from elsewhere in eastern Europe joined the European Union, and I support the Government’s actions.

David Lidington: I am grateful to my hon. Friend for his comments. I hope to say more about the transitional controls later, but he will have observed that the Minister for Immigration, my hon. Friend the Member for Forest of Dean (Mr Harper), is here, and I can assure him that the Home Office and the Foreign and Commonwealth Office are working hand in glove on the preparation for Croatian succession.
	For many years, EU enlargement has enjoyed firm cross-party support in the House. We can look back to the premiership of the noble Lady Baroness Thatcher to see support being expressed for enlargement covering the newly enfranchised democracies beyond what was once the iron curtain, at a time when it was not fashionable or even believed feasible that those countries of central and eastern Europe could become full members of the European family of nations. Today, for the countries of the western Balkans, including Croatia, that process of accession provides a means of entrenching political stability, democratic institutions, the rule of law and human rights —traditions and values that that part of our continent needs but which were crushed for much of the last 100 years.

Angus Robertson: I endorse the Minister’s comments. May I invite him to underline that the accession agreement foresees not only the points that he has made but the fact that on accession Croatia will nominate a commissioner, take up a seat on the Council of Ministers and have 12 MEPs?

David Lidington: The hon. Gentleman is right. Our support should not only be about what Europe is or ought to be; I also want to stress the point that enlargement, and Croatia’s accession in particular, is firmly in our national interest.

Michael Connarty: Just to clarify, as well as the rights and responsibilities that will come to Croatia if we pass this accession Bill, is it also correct that it will have to join the Schengen area and eventually become part of the eurozone, with the agreement that it will join the euro?

David Lidington: Croatia’s accession treaty provides for it to join the Schengen area and the eurozone, but, as the hon. Gentleman knows well, if Croatia is to join either, it will be required to meet some further tests. It is already understood in Zagreb and throughout the Schengen area that it will be at least two years before Croatia can contemplate a successful application. I know from the debates on the bids by Bulgaria and Romania to join the Schengen area that the current members look carefully at the strength of internal and external controls over immigration and asylum before they concede the much greater rights of freedom of movement and freedom from all kinds of border checks that go with Schengen membership.

Mark Field: The Minister referred to Romanian and Bulgarian accession. He will recall that before they joined the EU in 2007 they had to clear various hurdles and various parts of their economy had to be shown to be compatible with the EU, but at that juncture there was only a very limited stipulation stating that, if they failed to do so, their accession would simply be delayed by 12 months. Will he go into detail about precisely what hurdles Croatia will have to clear, particularly any penalties if it fails to meet economic requirements?

David Lidington: I want to come to that in greater detail later, but I can say now that the process that Croatia has gone through has been much more demanding than what was expected of Romania and Bulgaria or earlier accession states. One lesson that EU member states drew from the experience of Romanian and Bulgarian accession was that we needed to invent an additional category of accession conditions covering justice and fundamental rights measures. That is now embodied in chapter 23 of the accession process. Those things that, in the case of Romania and Bulgaria, ended up being addressed—in my view, rather unhappily, in terms of the actions of all sides—through the co-operation and verification mechanism post-accession have, in the case of Croatia, been addressed upfront.
	We heave learned further lessons from Croatia’s accession process. Although chapter 23 has been a significant advance, we recognise that, as we look forward to an accession process that in the Government’s view should embrace all the countries of the western Balkans, we need to find a way of ensuring not only that the accession process provides incentives for, and insists upon, rigorous reforms of the administrative and judicial life of an applicant country but that the applicant country has the opportunity to establish a clear track record of implementing those reforms. With the decision earlier this year to open accession negotiations with Montenegro, a new approach has been introduced under which those chapter 23 measures—and, for that matter, the chapter 24 measures applying to home affairs matters—will be dealt with first. The objective is to open those negotiating chapters early on, to see those reforms
	under way and then to hold those chapters open until the end of the process, so that it becomes a question not only of seeing reforms enacted but of seeing a consistent track record.

Mark Field: I hope that the Minister will forgive me, but his answer prompts a further question. He referred to the coalition Government’s support for other nations in the western Balkans joining the EU in due course. Would the same apply to Serbia, assuming that Croatia was happy about it and assuming that Serbia wished to join and met all the guidelines? Would the Government approve that too?

David Lidington: Yes, we have made it clear—my right hon. Friend the Foreign Secretary repeated this in Belgrade in the past couple of weeks—that we support Serbia’s ambitions to join the EU. It is also, however, important that while remaining vigorous supporters of EU enlargement we remain committed to rigorous accession criteria. That is in the interest of the candidate countries and of the integrity of the EU.

Kelvin Hopkins: My constituency is home to some Bosnian Muslims. The accession of Croatia will erect a much more significant border between Croatia and the other Balkan countries—setting Montenegro aside—particularly the significant ones to the south, Serbia and Bosnia. Before Serbia attains accession, which might be many years ahead, the relationship may change. Does the Minister have any thoughts about how that relationship might change in the future?

David Lidington: I hope that the requirement to police the external EU border between Croatia and Bosnia and Herzegovina will provide an additional incentive to political leaders in the latter to commit themselves with greater energy to the task of political and economic reform, particularly political reform and reconciliation, which is needed if they, too, are to qualify for EU membership.
	One of the sadnesses about the western Balkans today is that Bosnia and Herzegovina, which a few years ago saw itself as at the head of the queue of potential new members of the European Union has now fallen behind not only Croatia, but Montenegro in that race. I want to see Bosnia and Herzegovina move towards EU membership, and for that matter NATO membership too. I hope that one impact of Croatian accession is that people and leaders in Bosnia and Herzegovina will see that they need to commit themselves with renewed energy and vigour.
	The United Kingdom’s interest in Croatian accession lies partly in the fact that we have a national interest in the long-term political stability of the western Balkans, and partly in the fact that there are economic benefits to expanding the single market. Our trade with the eastern and central European countries continues to grow. To give the House one example, United Kingdom exports to the “emerging Europe” countries of central Europe have trebled over the past 10 years, reaching around £16 billion in 2011. More recently, in the first quarter of this year our exports to countries in the east of Europe have increased by no less than 28%, so in economic
	terms, amidst the current financial crisis, the project of EU enlargement remains as relevant now as it ever has been to our economic as well as our political interests.
	Following the ratification of Croatia’s accession treaty by all 27 EU member states, Croatia is expected to join the EU on 1 July 2013. Meanwhile, we expect Croatia to sustain the momentum of six years of significant reform, particularly on judiciary and fundamental rights issues, so that it meets fully all EU requirements by the time of accession. This is something to which I know the Croatian Government are committed. When I visited Zagreb in July this year to discuss the ongoing reform progress, I was impressed with the dedication in evidence, particularly from the Foreign Minister and the Justice Minister of Croatia. They are very aware of the challenges that face their country and they are keen to prove to us as their neighbours and friends, and to their own citizens, that they can make a success of accession. It is on that basis that we look forward to welcoming Croatia to the EU as the 28th member state.

Graham Stringer: Is that not a rather pious hope? Once Croatia is a member, if it decides to resile from the commitments, what actions can be taken? What actions have been taken as Hungary has departed from the standards that we would expect from a member of the European Union? The answer is none.

David Lidington: There are within the treaties articles that can be invoked. For example, if a member state departs from fundamental standards of human rights and democratic values that are embodied in the articles of the treaty, ultimately its full rights as an EU member can be suspended. [Interruption.] The hon. Member for Moray (Angus Robertson) reminds me that when a far right party entered the Government of Austria a few years ago, Austria found that it started to get frozen out of normal EU business. So although they may be blunt instruments that are in the treaties, the instruments are there.
	Also, in the pre-accession monitoring arrangements for Croatia there is a provision under which, if Croatia fails to deliver on what she has promised, the Council is entitled to take all necessary measures to deal with the situation. That might, for example, mean that if Croatia were to fail to carry through the necessary market reforms of its shipbuilding sector—I do not expect that—certain EU financial benefits could be withheld until those reforms had been implemented. I do not think we are as lacking in sticks as the hon. Member for Blackley and Broughton (Graham Stringer) suggests.

Michael Connarty: rose —

David Lidington: Let me say this, then I will give way. Croatia has applied for European Union membership both because it sees this as of symbolic political importance and its leaders want to entrench democratic values, human rights and the rule of law in their country, and because Croatia sees some significant economic benefits to participation in the single market. Croatia also wants to move on and apply for Schengen membership. The one thing that Croatia’s leaders know is that if they were to depart from the promises that they have given,
	their chances of benefiting in the way that they hope and that their people expect would be reduced accordingly. That remains a powerful motive.

Michael Connarty: The Minister has led on to the question that I wished to ask. He mentioned application for Schengen and cross-border rights, but the Schengen acquis requires countries to sign up to a great deal of immigration and co-operation in cross-border law and other aspects. Is it expected that the Schengen acquis will be put in place part by part before the application, or is Croatia not expected to do anything in relation to those things? That is relevant as we struggle with opt-ins and opt-outs.

David Lidington: What Croatia has to do is what was set out in the negotiating chapters, particularly in chapter 24, to equip itself to deal with the responsibilities of European Union membership. I shall say a little about the borders issue later to try to address those comments. Membership of Schengen requires Croatia and any other member of Schengen to go further. The pace at which any reforms specific to Schengen are introduced and implemented is a matter between Croatia and the Schengen members. It is difficult for me as a Minister for a country that has chosen to stay outside Schengen and has no intention of joining it to try to prescribe what the pathway should be for Croatia’s hopes to join the Schengen agreement.
	In its report the European Scrutiny Committee made a number of criticisms of the Commission’s and the Government’s conclusions about the readiness of Croatia to join the European Union. The Government will of course reply formally to the report of the Scrutiny Committee in due course, but as the Committee has chosen to tag its report to the debate today, I thought it might be helpful to respond to the main thrust of the Committee’s criticisms now, during the debate. We will have other opportunities during later stages of the Bill to explore the points that my hon. Friend the Member for Stone (Mr Cash) and his Committee raised, and as I said, there will be a formal Government response to the Committee in due course.
	I shall try to deal briefly with three or four of the main issues raised by the Committee in its conclusions. Let me take first the issue of war crimes, both co-operation with the International Criminal Tribunal for the Former Yugoslavia and domestic war crimes. On co-operation with the tribunal, I want to stress that not just the United Kingdom but the European Commission and the tribunal itself believe that Croatia is fully co-operating with the tribunal. Indeed, the chief prosecutor, Mr Brammertz, has now said that he sees no need for him to visit Zagreb again and he has taken the decision to wind down the status of the tribunal’s office in Croatia. On 3 May this year, while visiting Zagreb, Mr Brammertz said that there were “no outstanding issues” that might burden relations between Croatia and ICTY. On 7 June, in a statement to the UN Security Council, he said:
	“The Office of the Prosecutor continues to rely on Croatia’s cooperation to efficiently complete trials and appeals. In the current reporting period (as at 14 May 2012), the Office sent 18 requests for assistance to Croatia. The Croatian authorities have given timely and adequate responses to the requests made and it has provided access to witnesses and evidence as required. The Office will continue to rely on Croatia’s cooperation in upcoming trials and appeals.”
	The chief prosecutor, who in the past has been critical of what he saw as shortcomings in Croatia’s level of co-operation with him, has now said that in his view Croatia has co-operated, and continues to do so, in the way he would rightly expect.
	The issue of domestic war crimes is a difficult one. One need only look to our own country’s history in Northern Ireland to see how difficult it can be to get to the truth about some of the most vile murders. There are about 1,200 cases on file relating to domestic war crimes in Croatia, but we need to break that total down into three categories. There are about 400 cases for which trials are pending, about 400 where the accused cannot be found and a further 400 or so where the indictments are in a pre-investigative phase but the perpetrator is unknown—it is believed, on the basis of evidence, that a war crime might have been committed but no individual or group of named individuals can be cited as having been responsible. The average length of a trial for a domestic war crime is about six to seven months.
	In 2010, four specialised chambers were established to deal with domestic war crimes. In May 2011, new legislation took effect to require the transfer of outstanding cases to those chambers and, in the autumn of 2011, new judges were appointed to those specialist tribunals. So far, 87 cases have been transferred to the specialist tribunals. The Government’s view is that progress has been too slow and that the Croatians need to devote more resources to that work. Our assessment is that the commitments Croatia made can be described as “almost complete” but that more progress is still required. We are confident, given the commitments we have had from the Croatian Justice Ministry, that that acceleration will have taken place by the time we reach the expected accession date.
	Some of that progress is simply about procedural reforms: new listing priorities have now been established; prosecutorial standards are being applied better; there is, importantly, improved co-operation between the Croatian and Serbian authorities in investigating war crimes; and the Croatian side has submitted a draft agreement between those two countries for co-operation in the prosecution of such cases. The Commission has said that more still needs to be done to secure the attendance and protection of witnesses, who might well fear for their safety when giving evidence in this kind of case. We think that progress has been slower than it ought to have been but are confident about the seriousness with which the Croatian authorities are taking it.
	I will move on to borders and address the point that the former Chair of the European Scrutiny Committee, the hon. Member for Linlithgow and East Falkirk (Michael Connarty), made in his earlier intervention. Croatia has been making good progress. She already has 81 fully operational border crossing points and has given assurances that the necessary infrastructure and technology will be in place to support those crossing points and ensure strong border management by the time she accedes to the EU. The most important outstanding element is the need to provide formal border crossing points in the Neum corridor, which is the very narrow stretch of Bosnian territory that divides Croatia. The Croatians have told us that they are on course to complete the border crossing points in that important area next spring.
	After Croatian accession, of course, there will continue to be border controls between Croatia and its European Union neighbours. Because Croatia will not join Schengen straight away, those neighbouring countries that are EU member states already will maintain their border controls with Croatia, so any third-country national who got into Croatian territory, whether before or after EU accession, would still be subject to the same level of controls in a country such as Slovenia, and certainly in the United Kingdom, as they are today. I will add that one key advantage for us of Croatia’s accession is that she will come within the scope of the Eurodac regulation and the Dublin agreement on returns and readmissions, which will be helpful to us in the case of any people who manage to get through and abuse the asylum system and need to be returned to Croatia.

Alok Sharma: There will obviously be a seven-year transition period on economic migration from Croatia. Can the Minister tell the House—this is a general point relating also to Romania and Bulgaria—whether it would be possible under British law for us to extend that transition period if we think that is right for Britain?

David Lidington: The answer is that we cannot go beyond the period for transitional controls laid down in the treaties. I will say a little more about arrangements for Croatia later. For Romania and Bulgaria, we have extended the transitional controls for the maximum period committed and they have to come to an end by the end of 2013.

Jacob Rees-Mogg: May I add a rider to the Minister’s answer? This is without a “notwithstanding” clause to the European Communities Act 1972, but this Parliament could of course do that if it wanted to.

David Lidington: This Parliament can of course pass any legislation it wishes to. In that sense, what my hon. Friend says is constitutionally correct, although I in no way want to mislead him into thinking that the Government intend to introduce such an amendment to the 1972 Act.

William Cash: rose —

David Lidington: I know that I will have disappointed my hon. Friend grievously.

William Cash: My right hon. Friend, far from disappointing me, has enlivened me to rise, and I do so for this very good reason: this is the first time, as far as I am aware, that any Minister has conceded from the Dispatch Box that the constitutional principle of the “notwithstanding” formula is valid. I was delighted to hear what he had to say.

David Lidington: My hon. Friend is tempting me dangerously far from the scope of the debate, but I simply refer him to the happy day we spent in Parliament debating the sovereignty clause of what became the European Union Act 2011. If he looks at the Hansard record, I think he will find that I stated very clearly that if Parliament wanted to amend the 1972 Act at any stage, it is open for it to do so but—

Mr Speaker: Order. The right hon. Gentleman is a most earnest and assiduous member of Her Majesty’s Government, but the safest path for him to tread is in the direction of Croatia and the borders thereto.

David Lidington: I am grateful for that rescue, Mr Speaker. I want to move on to one other element of the Committee’s criticisms.

Wayne David: I understand that there has been a long-standing dispute about moneys held in the Ljubljanska banca in Slovenia which, it is suggested, belong to Croatia. Has that issue been resolved?

David Lidington: I discussed that with both the Slovenian and Croatian Governments when I was visiting Ljubljana and Zagreb earlier this year. We encourage both countries to find a bilateral solution. It is clearly not for the United Kingdom to lay down how that should be done, but they need to find a bilateral agreement that is in accord with the various international treaties to which the two countries are party. We hope that they succeed in the very near future.
	The Committee was critical of the Government’s assessment that Croatia was making good progress with the reform of the judiciary and the courts. I am conscious that I have given way a lot and that other Members want to speak, but I want to deal with the most egregious element of the problems with the legal system in Croatia: the backlog of civil cases, to which the Committee drew particular attention.
	The backlog in criminal cases in Croatia has fallen for some time and continues to fall, and we ought to pay tribute to the work that the Croatians have done to achieve that. They are still finding it a battle to reduce the backlog in civil cases, but it is important that we should not be misled by grand totals of the number of civil cases before the courts.
	According to the figures that I have for the first half of 2012, roughly 844,000 new civil cases reached the Croatian courts; in the same period, roughly 836,000 cases were resolved. Although the total number of cases pending increased slightly, it would be wrong to think that 800,000-plus cases simply sat there in the “pending” tray and never moved. The truth is far from that. There has been a reduction in the backlogs in respect of the older cases—those over 10 years old or over three years old. The Croatians have also assigned a significant number of additional judges to focus on the backlog. Again, although we accept that further work needs to be done, we think that Croatia has made good progress and is committed to completing it. We do not believe that that is a reason to delay its accession.
	I move on to migration. Croatia has a modest population of about 4.5 million. The potential impact of Croatian migration is relatively small, but we know that appropriate immigration controls are crucial for stability in our labour market, particularly in the current economic climate. Recently, the Home Office published its intention to impose transitional controls on Croatian workers in line with the Government’s policy to impose such controls on workers from all new member states, under the terms provided for in their accession treaties.
	The accession treaty for Croatia sets out the framework within which member states may apply transitional controls to Croatian nationals who wish to work in
	their country. That framework is as follows. During the first two years following accession, the existing 27 member states can apply either national immigration controls or those resulting from bilateral agreements to regulate access to their labour market by Croatian nationals.
	From the third year to the fifth year, member states have the option either to continue to apply the same controls as in the previous two years or, if they choose, to grant Croatian nationals the right to move and work freely, in accordance with European Union law. For the fifth year, member states must grant Croatian nationals the right to move and work freely in accordance with EU law. However, if member states find that they are subject to serious disturbance of their domestic labour markets—this has to be an evidence-based assessment of the kind that we seek from the Migration Advisory Committee—those member states may choose to continue to apply controls for a further two years, taking us up to a seven-year maximum period after accession, having first notified the European Commission.
	The Home Office will be bringing forward detailed regulations on the transitional controls early in 2013, so the House will have the chance to debate the detail of those ahead of Croatia’s planned accession date. However, the Government’s intention is that for the first two years at least we would continue with the current arrangements under which Croatian nationals who would qualify to come and work here under the points-based system would be allowed to do so, although we do not envisage further relaxation beyond that.

Angus Robertson: For decades since independence, there have been associations between the former Yugoslavia and the subsequent nations. There are decades of experience of citizens from that part of the world working in Germany and Austria as Gastarbeiter. Based on that assessment, do the Government agree that when the free movement of labour comes into force, those citizens are most likely to travel to countries with which there is an historic association—in the first instance, Germany and Austria?

David Lidington: The hon. Gentleman is right. According to our figures for 2011, about 2,000 Croatians emigrated to other EU member states and half of those went to Germany. UKBA figures for 2011 show that only 115 Croatian nationals were admitted to the United Kingdom to work.

Michael Connarty: I appreciate the Minister’s argument about the small number of those likely to immigrate legally. The problem is that the equivalent-sized country of Moldova, which has a population of 4.5 million, has a trafficking record similar to that of a country with 50 million people. It is used as a gateway. The problem is not legal migration but whether there is a prospect of the mafia—for want of a better word—of the Balkan states using Croatia as a gateway for people trafficking. That would be the concern. Are the police in Croatia up to dealing with such an influx?

David Lidington: That is a perfectly fair question, but I assure the hon. Gentleman that there is no evidence at the moment that Croatia is being used by traffickers as he says has happened in Moldova. However, people traffickers are extremely professional, well organised
	multinational businesses. We have to be vigilant and continue to work closely with the Croatian authorities, trying to provide the practical advice, support and training that we have been giving them as they carry out their immigration, asylum, judicial and administrative reforms, so that their own systems are up to scratch in ensuring that they cannot be exploited by traffickers. The Croatian Government would not want that to happen, and nor would we.
	Now I want to talk briefly about the Irish protocol. The addition of the Irish protocol to the EU treaties does not have a significant impact for the United Kingdom. It relates to a series of guarantees given to the Irish people as a condition of their ratification of the Lisbon treaty, but it does not change the substance or application of the treaty. It confirms the interpretation of a number of its provisions in relation to the Irish constitution. Helpfully, the Irish interpretation of the Lisbon treaty aligns with our own.

Angus Robertson: I invite the Minister to take the opportunity to acknowledge that the Irish protocol underlines the rights of member states to set their own tax rates. The Irish Government sought that important guarantee. However, that rings true not just for the Irish Republic but for all member states of the European Union in future, which is welcome.

David Lidington: It is very welcome that the Irish protocol makes that assertion about tax sovereignty, which is in line with our own interpretation of the Lisbon treaty and previous European Union treaties. The Irish protocol also confirms that neither the charter of fundamental rights nor the Lisbon treaty in the area of freedom, security and justice affects the scope and applicability of the Irish constitution as regards the right to life, protection of the family and protection of rights in respect of education. It confirms that the Union’s action on the international stage, particularly under common security and defence policy arrangements, does not prejudice the security and defence policy of individual member states or the obligations of any individual member states. It also deals with other matters specific to Ireland, such as its long-standing position of military neutrality. It was formally agreed by Heads of State and Governments of the 27 member states in June 2009. It amounts to a guarantee in international law that the concerns raised in Ireland were unaffected by the entry into force of the Lisbon treaty. Once all 27 countries have formally ratified the Irish protocol, it becomes binding in terms of the European Union as well as of international law.
	The Government’s original intention had been that we might include with this legislation a comparable but differently worded protocol as regards the Czech Republic. That is still stalled in the Brussels decision-making process. The European Parliament has yet to produce an opinion on the Czech protocol, and until that has come out of the Brussels negotiations it would be premature for us to think about bringing forward legislation here in Parliament.

Jacob Rees-Mogg: I wonder whether, while negotiating the Irish protocol and the Czech protocol, Her Majesty’s
	Government considered repatriating any powers to the United Kingdom which could have been part of this treaty negotiation.

David Lidington: As I said, the protocol was negotiated in 2009, so I fear that my hon. Friend’s challenge has to be for my predecessors in office who are now on the Opposition side of the House. Nothing would have been served in terms of the United Kingdom’s interest by our now saying that we would block ratification of the Irish protocol unless we obtained some concession of our own, because the thing at stake would not have been the ratification of the Lisbon treaty but the ratification of the Irish protocol, to which we have no objection and which is wanted by one of those countries with which we have an extremely close bilateral relationship.

Mark Durkan: Does the Minister accept that the protocol confirms the pre-existing sphere of competence of Ireland under its own constitution, further supplemented by the confirmation in relation to neutrality?

David Lidington: Yes, I do.

Jacob Rees-Mogg: I wanted my right hon. Friend to confirm, as I think he has, that it was open to the UK, as with any treaty negotiation, to use this as an opportunity to negotiate for our own interests, but the Government decided on this occasion that it was not worth doing so.

David Lidington: The point of principle that my hon. Friend makes is certainly right—that during a treaty negotiation it is open to any member state to withhold its consent unless it receives a concession that it is seeking. Obviously, during such a negotiation every member state has to calculate where its national interest lies and what kind of bargain it wants to achieve. However, this is now water under the bridge, as these events took place before the previous general election.

Chris Bryant: No, the Minister is wrong. What a member state tries to do, across the piece and over a period of time, is to decide what its main priorities may be. That does not mean that every time a treaty is coming up, it decides to put yet another thing on the table. Indeed, I would argue that the problem with the Government’s current approach is that they are trying to fight the European Union on too many fronts at the same time and will not secure any of their intended outcomes.

Lindsay Hoyle: Order. I am aware that the hon. Gentleman has only just come in, but we do need shorter interventions. I know that he gets carried away, but I am sure that he will be shorter in future.

David Lidington: I am not going to get drawn into a historical battle about my predecessors’ record in office. I would argue that the previous Government were too reluctant to use the leverage that we had from negotiations at the time of the Lisbon treaty, but that is a matter that the House can debate and historians will no doubt wish to comment on in future, and I do not want to spend further time on it today.
	The measure before us will provide for the accession of Croatia to the European Union, thus marking another step in the Government’s long-held support—this country’s long-held support under successive Governments—for the enlargement of the European Union. Enlargement has been a project whereby the European Union has benefited from the United Kingdom’s ideas, engagement, and—dare I say it?— leadership over many years and under successive Administrations.
	If we compare the history of Europe in the 20 years since the fall of the Berlin wall with the 20 years following the treaty of Versailles, drawing a contrast between, in the earlier period, a time when fragile new democracies collapsed under the strain of domestic political tension, dictatorship and invasion, and, in the 20 years just passed, a time when we have seen democracy, the rule of law and human rights entrenched in ever more countries on our continent, we can see the advantage that European Union enlargement has brought, and we can be proud of our own nation’s contribution to that process. In that spirit, I ask the House to support the Bill’s Second Reading.

Lindsay Hoyle: I call Michael Connarty. [Interruption.] Sorry, I mean Emma Reynolds.

Emma Reynolds: Thank you, Mr Deputy Speaker.
	I will attempt to be relatively brief, or at least briefer than the Europe Minister, in order to allow my colleagues and others to speak.
	The Opposition welcome the Bill, which will, first, give effect in UK law to the treaty on the accession of the Republic of Croatia to the European Union and provide parliamentary approval of that treaty; and secondly, provide approval for the so-called Irish protocol, which gives specific guarantees to the Irish people regarding the extent and application of the Lisbon treaty and safeguards Ireland’s right to decide its own policies on the right to life, family and education, taxation, and Irish neutrality.
	With regard to the accession treaty, there is, as the Europe Minister underlined, cross-party support for enlargement of the European Union in this House, and that has long been the case. This support is based on both the political and the economic case for enlargement. The process of EU accession has provided, and continues to provide, an incentive for peace, democratisation, economic reform, the promotion of human rights, and the development of anti-discrimination legislation. That is the clear political case for enlargement. The Nobel peace prize committee rightly recognised that the EU has played a vital role in unifying a continent ravaged by wars and inspired peace and democracy beyond its borders.
	In terms of the economic case, again I find myself in agreement with the Europe Minister. It is clearly in the UK’s national interest for British companies to have access to the largest single market in the world, with some 500 million consumers, and for that market to continue to grow with enlargement. We are confident that British businesses will find new opportunities in a reformed Croatian economy.
	When the Labour party was in government, we supported the accession path for the western Balkans. Since the end of the bloody conflict in the former Yugoslavia and the signing of the Dayton accords, which took place only some 17 years ago, there has been remarkable progress. We were strong supporters of Slovenia’s accession in 2004. Croatia started accession negotiations in the same year and those negotiations were concluded in June last year. Croatia has transposed the 35 chapters of European law into its national legislation, and that is no mean feat. We welcome the transformation of Croatia’s society, economy and democracy that adopting these laws has brought about, although we still have concerns about progress in certain respects; I will come to those later.
	In December last year, the accession treaty was signed by Croatia and all 27 member states, and it was approved by the European Parliament. Parliaments in all other member states are now debating the accession treaty and going through the process of ratification, as are we, and 16 member states have so far ratified it.
	In the run-up to accession, Croatia has “active observer status.” Its 12 observer MEPs are allowed to speak but not vote in the European Parliament, and it has the same rights on Council working groups and Commission committees. The Commission’s recent enlargement report, published last month, set out three areas in which Croatia must do more—competition, judiciary and fundamental rights, and security and justice.
	This time last year a debate in this House looked specifically at Croatia’s progress on chapter 23 of that report—judiciary and fundamental rights—and several right hon. and hon. Members made the point that we should learn lessons from previous rounds of enlargement. It is important that the momentum Croatia has built up does not stall, and that progress is made before accession. We must avoid a situation where the European Union has to put in place a co-operation and verification mechanism to monitor areas that have not seen sufficient progress prior to accession. I am therefore happy to see that pre-accession monitoring is ongoing in Croatia, and we are expecting a further report from the European Commission some time in the new year—spring, I believe —and before Croatia’s expected accession on 1 July.
	When in government, the Labour party led the way in putting pressure on Croatia and all states in the western Balkans to engage fully with the International Criminal Tribunal for the Former Yugoslavia to bring war criminals to justice. Indeed, chapter 23 of the report was opened so late because at the time the Labour Government judged that they needed that leverage to ensure the Croatian Government co-operated fully with the ICTY. I think we were right to do so, and all outstanding fugitives wanted by the tribunal are now on trial in The Hague.
	In April last year, former military commanders, Ante Gotovina and Mladen Markac, were sentenced by the Court for their role in the war. Those convictions show that justice has been done, and that the international community can and will pursue the perpetrators of war crimes. Engaging constructively with the Court is a test of Croatia’s willingness to draw a line under its past and look towards a brighter future within the EU.
	The European Commission also highlighted that increased effort is needed to strengthen the rule of law, improve the judicial system and fight corruption. There
	is still significant concern over the extent of corruption at both local level within the public procurement process and in some state-owned companies.

Pete Wishart: The hon. Lady will know that another very important European debate was to take place in Westminster Hall this afternoon, but the lead speaker did not turn up. Does the hon. Lady have any excuse for why that happened and why hon. Members did not get that debate?

Lindsay Hoyle: Order. That has no relevance to this debate, and hon. Members should know a little better than trying to embarrass each other. Surely we have better manners.

Emma Reynolds: I remind the hon. Member for Perth and North Perthshire (Pete Wishart) that today’s debate is about Croatia’s accession to the European Union. Should other states wish to join, there will be debates in this House and Parliaments around the EU about that accession, and I am sure that conditions will be attached. I am sure there will be future opportunities to debate the subject to which the hon. Gentleman refers, even if that is not in order today.
	To return to the subject, there is concern about conflicts of interest and the way that political parties and electoral campaigns are funded in Croatia. The European Commission has recommended that a conflict of interest commission “be established without delay”, and the Opposition support that demand. On competition policy, Croatia has taken positive steps to strengthen its anti-trust laws, but further progress is needed in relation to state aid in the steel and shipbuilding industries. As the Europe Minister said earlier, progress is also needed in restructuring the Croatian shipbuilding industry.
	On border security, notwithstanding the Minister for Europe’s earlier remarks, Croatia will at some point assume responsibility for the EU’s south-eastern border. What happens on that border will directly impact the rest of the EU, and indeed the UK, in terms of preventing illegal immigrants from entering the EU, and breaking up and stopping human trafficking—my hon. Friend the Member for Linlithgow and East Falkirk (Michael Connarty) referred to that issue. Croatia’s role in those areas will be vital, and we therefore welcome increased co-operation between Croatia and its neighbours. I welcome what the Europe Minister has said about the UK’s assistance in that area.
	More widely, Croatia has taken positive steps towards accession in a number of areas, which should be welcomed. The police force and courts have undergone important reforms. A new police law has raised standards and removed political pressure, and respect and protection for human rights—in particular LGBT rights—has improved. During the debate in the House last year, I raised the issue of LGBT rights in Croatia, and expressed concern that a gay rights parade in Split had been attacked with no intervention or protection from the police. I am pleased to say that since that debate, gay pride events in Split and Zagreb have taken place peacefully and been protected. The European Commission and MEPs have continued to put pressure on the Croatian Government, and in particular I put on the record my
	thanks to Michael Cashman, a Labour MEP who has continued to put pressure on that Government for those welcome improvements.

David Lidington: I am sure the hon. Lady would want to join me in paying tribute to the strong personal commitment of Vesna Pusic, the Croatian Foreign Minister, who has made it something of a priority to see that Croatia makes good on its pledges and obligations concerning civil rights of the kind mentioned by the hon. Lady.

Emma Reynolds: I welcome that intervention, and the commitment of the Croatian Foreign Minister in that area.
	Clause 4 of the Bill provides
	“a regulation-making power to make provision on the entitlement of Croatian workers to work and reside in the UK;”
	and I welcome the further clarification provided by the Europe Minister. The Opposition believe that the Government should implement the maximum transition period for Croatian nationals who want to come to the UK to work, as we did when in government with the accession of Romania and Bulgaria.
	As I stated in a European Scrutiny Committee debate earlier this year, the Labour party fully supports the Irish protocol, which it helped to negotiate when in office. We value the continued partnership between the UK and the Republic of Ireland, and recognise the special relationship that our two countries share. As we have heard from the Minister, the draft Irish protocol contains safeguards for Ireland on the right to life, family and education, taxation, and Irish neutrality, and it provides a clarification on the application of the treaty on the functioning of the European Union, and the treaty on the European Union, and does not change the content of these treaties. We welcome that clarification, and support the Irish protocol as part of the Bill.
	In conclusion, Croatia’s preparations to join the European Union have been more thorough than in previous accessions. An impressive range of reforms have been introduced and valuable lessons have been learned from previous accessions. Croatia’s accession to the EU will send a signal to the rest of the Balkan countries that their future belongs in the EU, and it will provide encouragement and incentives to those Governments not to let up on the pace of reform, but to root out corruption, reform their political and judicial systems, and modernise their economies.

Jacob Rees-Mogg: May I say what a particular pleasure it is to see that the Prime Minister, in his wisdom, has tabled a motion for 7 pm so that this debate may continue “until any hour”? It is always reassuring when European debates are not limited by an unnecessary constraint on time, although I note that having done that, the Prime Minister has left the country. Perhaps he does not want to hear hon. Members’ full ruminations on this subject.
	I begin by commiserating with Croatia, which has decided that it wishes to join the European Union—an organisation that others may be looking to get out of if they possibly can. One always has a certain sympathy with nations that gained their freedom not so long ago and now wish to hand it over to another body and organisation.
	I refer hon. Members to the report by the European Scrutiny Committee, which the Minister touched on. It concerns me that, once again, the European Union is not learning from experience. It always thinks that countries may be ready for something, yet it comes as a nasty shock when those self-same countries are not ready. We saw that with monetary union, which the EU pushed on member states that were not conceivably ready to join. It said that there was an efficient system afterwards to ensure that countries would be brought into line, and that everything would be made to work ex post facto, but that is precisely what did not happen. We see the same with Romania and Bulgaria, which are constantly found to be in breach of their commitments. The European Scrutiny Committee has highlighted various issues, some of which go beyond the Minister’s remarks, while others reiterate his points about the difficulties of Croatia’s membership of the EU.
	I would highlight Croatia’s 2,000 mile border. My concern is not Croatia’s 4 million population, but that lots of people can get through a border, as we have seen in Greece. Unless a country has a rigorous system of citizenship in the first place, people can establish rights to be members of it, or pretend to have done so. Once they are inside the EU, they can come waltzing into England without so much as a by-your-leave, as they can into Scotland—I am pleased to see so many of our friends from the Scottish nationalist party in the Chamber for the debate.

Angus MacNeil: It is the Scottish National party.

Jacob Rees-Mogg: Not nationalist? I do apologise.
	If a country has weak borders, it undermines the free movement of people within Europe.

Kelvin Hopkins: There has been discussion in recent years of the possibility of passport controls at internal borders. If there were, and if everyone had to carry a passport if they were not a resident of a country, we would solve some of that problem.

Jacob Rees-Mogg: I am very reluctant to see controls on the free movement of people within the UK. We ought to have secure borders, and the extension of the EU has weakened our border controls and allowed member states to give their citizenship away. One recent case is Hungary, which sells citizenship. If Hungarian citizenship is sold, UK citizenship is also effectively sold, because people will have the free right to move and settle here. In due course of time, when the provisional practices that apply to countries such as Croatia, Bulgaria and Romania end, their citizens will also be able to work here.
	That ought to concern us. I agree with my right hon. Friend the Home Secretary, who has said that we need to look at the whole question of the free movement of people, because of certain extraordinary anomalies within it, which were highlighted on “The World Tonight” on Radio 4 last night. The programme explained the difficulties that UK citizens have in bringing in a dependant who is not an EU national. However, a member of another EU nation state who is resident in the UK can bring in a dependant who is not an EU national.
	One could argue that the structures of the free movement of people in the EU are in fact racist, because they deny the right of people from Commonwealth countries, who are often non-white, and who have very close associations with the UK, to come here, when people within the EU, with whom we sometimes have very little connection, can come here. We must therefore look at the free movement of people of the EU. It used to be a rich man’s club, but it is a European man’s, and indeed woman’s, club that excludes members of the Commonwealth who are not also EU members, who are often not white. This is a serious question for us to think about. Is the basis of the free movement of people within the EU fundamentally a racist principle? We need to consider whether seven years will be enough for Croatia, and whether we should amend British law to restore controls over immigration that are fair to people across the world, and that do not discriminate favourably towards Europe but unfavourably towards others.
	Croatia might not be ready to join and might fail to meet the requirements of the EU. On tackling corruption, the Commission is concerned that only three people have been found guilty of abuse of office. The Commission states:
	“The implementation of the Law on the Police should be ensured, in particular to depoliticise the police and increase professionalism”.
	That that problem has not been tackled is a difficulty. What if we cannot have confidence in the police in a country that is about to join? Even if it is not part of Schengen, it will be part of the European arrest warrant arrangements, but it does not have a de-politicised police force or one that has been made sufficiently professional. Are we really, after the middle of next year, going to allow British subjects to be arrested on the say-so of a Croatian court, when Croatia has a police force in which even the European Commission does not have confidence?
	The European Scrutiny Committee report shows that what is sought from Bulgaria and Romania is not happening. The same applies to some extent to Croatia. Is there an autonomously functioning and stable judiciary? That, too, relates to justice and home affairs agreements. We allow the judiciary of foreign countries to have an effect on subjects of Her Majesty going about their business in the UK, but countries that are joining the EU do not meet basic standards. The report states that we have not seen
	“concrete cases of indictments, trials and convictions regarding high-level corruption and organised crime”.
	We are therefore concerned that the state is corrupt at the highest level, and yet we are allowing it to join before the problems are sorted out. That is once again the triumph of hope over experience—can letting them in and hoping to sort it out possibly be the right way forward when we have so many commitments through joint recognition of standards in fellow member states? We are also concerned that Croatia does not have
	“a legal system capable of implementing the laws in an independent and efficient way.”
	We must be more careful and prudent. Widening is a good thing—it is splendid to have a wider rather than a deeper EU—and it is good thing that newly emerged democracies have been able to come into the EU fold. However, when we have so many commitments to the EU that can be enforced upon us by foreign countries, is
	it right that we should let them in before the requirements have been met or without installing protections for ourselves by amending the treaties? I therefore have concerns that the opportunity to negotiate repatriations of power to the UK that could protect us from some of the inadequacies of the Croatian state before it joins the EU has not been taken—whether by the previous Government or this one is beside the point.
	In that context, it is worth looking at what Ireland has done. As we know, Ireland was bullied by the EU into voting twice. That was a classic example of the EU believing in democracy for others but not for itself. It is a question of them saying, “Vote as often as you like until you give the right answer, and then you don’t need to vote again.”

William Cash: The problem is not only with the application of the principles of democracy, but with the rule of law, as we will debate later. The EU makes the law, claims it has a legal framework for the rule of law, and then breaks European rules itself.

Jacob Rees-Mogg: I agree with my hon. Friend. There is a problem with how the rule of law applies across the EU. How can the EU have a rule of law when it allows in countries that do not meet the basic tests of being free of corruption and of having a properly functioning judiciary? They can then apply their law to our citizens. Surely that cannot be just or in line with the rule of law.
	On the concessions Ireland received, I give my wholehearted support for what the Prime Minister said in 2009, when he thought it was a good idea to do what the Irish did and to get concessions for the UK. In his brilliant speech, he said he wanted
	“the return of Britain’s opt-out from social and employment legislation in those areas which have proved most damaging to our economy and public services, for example the aspects of the Working Time Directive which are causing real problems in the NHS and the Fire Service”.
	I agree with him, but we should have brought those powers back in the negotiation on the treaty we are debating. He also said he wanted a “complete opt-out” from the EU’s charter of fundamental rights, and was once again absolutely right. The Minister for Europe ought to go back to our European friends and say, “This is what the Prime Minister wanted in the treaty, so perhaps we could have it.” The Prime Minister also said he wanted to limit
	“the European Court of Justice’s jurisdiction over criminal law to its pre-Lisbon level, and”
	ensure
	“that only British authorities can initiate criminal investigations in Britain”.
	The Prime Minister showed brilliant prescience. He knew what this country needed and what it ought to get back. The Bill could have brought it back, because we could have said to our European partners that we will not agree to Croatia’s entry or Ireland’s protocols if we are not given—[ Interruption. ] You are looking as if you were doubtful that my remarks would be relevant to the subject matter at hand, Mr Deputy Speaker. I can assure you that—

Lindsay Hoyle: Order. I assure the hon. Gentleman that I knew he would come into order. It was only a matter of time.

Jacob Rees-Mogg: I am grateful to you, Mr Deputy Speaker. How lucky it is that there is unlimited time for this particular debate.
	The Irish have shown with their protocol that it can be done. In fact, this is an exciting opportunity for this country. The Bill will be taken, and will be amendable by, a Committee of the whole House, and there has been much rejoicing at the conversion of the Labour party to deep, true-blooded, thorough-going Euroscepticism.

Emma Reynolds: I assure the hon. Gentleman that Labour remains a pro-European party. On Croatian accession and the Irish protocol, does he seriously think that his Government could withhold support for the Bill and negotiate and repatriate all the things that he has just mentioned? I do not think that he believes that to be a realistic prospect, because he is far too sensible.

Jacob Rees-Mogg: I am grateful to the hon. Lady, who is as flattering and charming as always, but it is good enough for the Irish, who got some serious concessions. The concession on taxation is a very important one. It establishes that taxation is not to be set at the European level. In fact, it is clever of the Irish to have got it, because Lisbon is bringing in an awful lot of things by the back door and the Irish have managed to close that back door, or the stable door as one may like to call it.

Angus MacNeil: Is the hon. Gentleman telling the House that the Irish have been more adept and a bit more clever than the UK in playing their hand in Europe?

Jacob Rees-Mogg: I know it is implausible that the Irish could have been more adept than people living in Na h-Eileanan an Iar, but they did indeed manage to get something by virtue of having a proper democracy that required a referendum on the treaty of Lisbon, to which the Irish people had the sense in the first instance to say no, but then they were bullied by Europe into saying yes at a later stage, with some guarantees. If we had had a referendum, I think that the British Government might have been able to get some pretty serious guarantees.
	The hon. Member for Wolverhampton North East (Emma Reynolds) asked whether I really believe that the Government could have negotiated concessions for the United Kingdom. Yes, I absolutely do, because the European Union wants the Lisbon treaty to function fully; the Lisbon treaty only functions fully with the Irish agreement, because it had to be agreed by unanimity; the Irish agreement was conditional on the protocols given in the Croatian accession treaty; and therefore it follows that if the United Kingdom had insisted on concessions to us that would have let the Lisbon treaty carry on for everybody else, we would have been in a very strong negotiating position to achieve them. That is probably still the case.
	I want to return to the general rejoicing at the socialists having become a new Eurosceptic party, as, of course, they were, rather less successfully, under Michael Foot not so many years ago. As a Eurosceptic party, they voted last week to stop spending more money in the
	European Union. It occurs to me that the Bill could be amended to say that it will only come into effect at the point at which our full rebate—which was given away by our Labour friends when they were last in government—is restored. Now that the Labour party is so committed to cutting expenditure in the European Union, it would almost certainly be willing to support such an amendment, so we can use this Bill on the Floor of the House to achieve the reduction in spending that so many Members of this House showed that they wanted last week. Indeed, I think it is the united will of the Conservative party that less money should go to Europe.

Graham Stringer: Is there not a deeper point to the Bill? Although expansion has genuine economic and political benefits, the United Kingdom’s influence is being diminished. Under qualified majority voting we will have less influence. Another country will also be a recipient of funds, as opposed to a donor, so our position is weakened.

Jacob Rees-Mogg: The hon. Gentleman is absolutely right. He makes a crucial point, which we will discuss further in our second debate, in which we will see that eurozone votes, as a qualified majority, are able to outvote everybody else, which seriously diminishes the UK’s voting power, as does this Bill. By adding another member state, we will go from 17 to 18 recipient, mendicant countries and 10 that pay in. It also means that one more part of the qualified majority will be against us and for more spending and for the ratchet of Europe.
	We need to be very cautious about what we do when we do not get anything in return—that is my main point. I am quite happy to welcome other nations to the European Union, if they really want to join. I understand that the Scottish nationalists might want to rejoin. I thought that the great argument for Scottish nationalism was that they would be free from Europe as well, but that is not the way they are going. We are not getting anything in return.

Angus MacNeil: To clarify for the hon. Gentleman, the point of the 2014 referendum will be to transfer political power pertaining to Scotland from Westminster to Edinburgh.

Jacob Rees-Mogg: rose—

Lindsay Hoyle: Order. May I tell the hon. Gentleman that he does not need to respond to that intervention, because he need only address the Bill?

Jacob Rees-Mogg: Thank you, Mr Deputy Speaker. I was merely going to say, “From Westminster to Brussels,” but never mind—that will be debated at a later point.
	The crux of the matter is that this was an opportunity for Her Majesty’s Government to ensure that we improved matters with regard to the free movement of people, extended the time for which that could be implemented, and asked the right questions about whether Croatia is ready to join and then delayed that until the right time. We are taking a risk with home affairs and justice by allowing this to go through and by recognising the
	Croatian justice system when it may not yet be fit. We are not taking the opportunity that the Irish have taken. We should do what the Prime Minister said in 2009 and use every single treaty negotiation to reinforce the repatriation of powers and to ensure that the United Kingdom can govern herself.
	This Bill is a great opportunity, because it is required to be passed unanimously by all member states of the European Union. We have an opportunity to tag on a budget-related concession to our ratification of the Bill, to ensure that article 312(4) of the treaty on the functioning of the European Union does not automatically kick in to force a rise in EU expenditure when the British people and many others want it to be cut. Let us give this Bill a Second Reading, but let us amend it in the Committee of the whole House to put British interests first.

Michael Connarty: Thank you, Mr Deputy Speaker, for my temporary promotion to speaking on behalf of the Opposition in this debate, which is not, unfortunately, something that has ever been, or is likely to be, accorded to me by those who run my party. Some would say that it is their loss, but it is my great pleasure to speak in support of my hon. Friend the Member for Wolverhampton North East (Emma Reynolds), who is my party’s Front-Bench representative and has been assiduous in her work and done a great job since she took over the brief.
	I see this debate in three parts. The first is about whether the UK Parliament supports Croatia’s membership of the European Union. I hope that hon. Members—apart from those who may demur from the wish of any country to join the European Union—would not want to deny Croatia or, indeed, the European Union the benefits that they will get as a result of further enlargement. In that spirit, I hope that hon. Members will support the proposal.

Barry Sheerman: As my hon. Friend will know, I have been a strong pro-European all my political life, but I am very worried that yet another country is coming in from eastern Europe without a great democratic tradition. Hungary seems to be breaking every rule of a modern democracy, yet the European Union does nothing about it. I am getting more concerned about—

Lindsay Hoyle: Order. The hon. Gentleman has only just walked in and the usual courtesy is to listen to a little bit of the debate before intervening. We also need shorter interventions. I call Michael Connarty—it is up to you whether you answer.

Michael Connarty: I understand the emotions that are running among those who have been pro-EU in their —[ Interruption. ]

Lindsay Hoyle: Order. The hon. Member for Huddersfield (Mr Sheerman) should know better than to challenge the Chair. It is not my fault that he may have been somewhere else in the House. If his preference is to be on a Committee rather than here, that is his choice, but he should not expect to walk in and intervene in that way.

Barry Sheerman: rose—

Lindsay Hoyle: Order. I have made my ruling.

Barry Sheerman: On a point of order, Mr Deputy Speaker.

Lindsay Hoyle: It had better be a point of order.

Barry Sheerman: I was on a Statutory Instrument Committee upstairs, and I have every right as a Member of Parliament to intervene on my colleague.

Lindsay Hoyle: What I have said is that it is discourteous to other Members of this House not to have listened a little bit to debate, but instead to walk in and intervene straight away. That is my ruling.

Michael Connarty: I repeat: I understand that people who have been supportive of the EU process over many years are now expressing great concerns. Those concerns have been expressed in the European Parliament, and they are certainly expressed at great length in the Parliamentary Assembly of the Council of Europe, on the basis of human rights, as some of the issues in Hungary are a challenge in that respect. The question for us today is not what the EU should do about Hungary, however, but what we should do in relation to Croatia’s application to join the European Union.
	As hon. Members know, I work on behalf of this Parliament as a member of the Labour delegation in the Parliamentary Assembly of the Council of Europe. In fact, I work in the committee on culture, science, education and media, which is chaired by Mr Gvozden—I believe that is the correct pronunciation—Flego, who is a professor from Croatia. He is very dedicated to human rights; in fact, a number of his colleagues are leading the way in challenging their Government to come up to the standards we require in the European Union and to support the application. The problem—the hon. Member for North East Somerset (Jacob Rees-Mogg) alluded to this—is that this treaty is one of the ones that, when the Government introduced the European Union Act 2011 and said that they would renegotiate the terms and relationship with the EU in this Parliament, was listed as not requiring a referendum because it is an accession treaty. That is a great pity, because the accession treaty not only allows Croatia to enter, but allows protocols to be added to the Lisbon treaty—that is, to amend it.
	It is a great regret for many people in this country that we did not take the Lisbon treaty to a referendum, as we would have had to do if it were a constitutional treaty. Hon. Members will recall that when I chaired the European Scrutiny Committee and we reported on this matter, we came to the conclusion that the Lisbon treaty was not much different from the constitution, apart from a few flags, bunting and anthems. Really, it maybe should have been decided then whether a referendum was required. It will always be a great point of contention with the British people—and, I think people in this Chamber—that we did not get that clarified at the time.

William Cash: I should remind the hon. Gentleman that the Conservative party voted en masse for a referendum on that treaty.

Michael Connarty: I remember the unity of the Conservative party at that time, although most people have forgotten about it, given the number of attacks that the hon. Gentleman has led on his own Government. In fact, if that unity had continued, we would not have seen the ridiculous situation of him and others joining the Labour party last week to vote down his Government on an issue to do with the EU. It might have been better for his party if it had remained unified; for us, it has exposed the faultline that runs through the parties.

Mark Pritchard: On a point of order, Mr Deputy Speaker. Just for the record, it was a Conservative amendment that the Labour party supported.

Lindsay Hoyle: As the hon. Gentleman well knows, that is not a point of order. The other thing is that we are getting distracted from what is before us. Rather than being tempted into discussing the decisions of a previous House many years ago, let us get back to Croatia and Ireland.

Michael Connarty: The point has been made that there should be a wider mandate in deciding whether the treaty should go through. It should not just rest with this House. As you have said, Mr Deputy Speaker, that has been decided before, but the Bill contains provisions on the Irish protocol, which, as has been pointed out, provides only a clarification. It is the same protocol that the UK got in the original Lisbon treaty, but as was pointed out in many debates and in many legal opinions that we received in the Committee, all it stated was what was already in existence—that every country has the right to its own Bank and that no country will lose any rights that it already has because of the Lisbon treaty coming into force.
	The protocol did not change anything, but if the Irish people require that reassurance, that is fine. However, it does trigger a change in the Lisbon treaty, and a change in a major treaty should, in reality, be required to be put to the British people—if, as has been pointed out, we are also to get the credibility of the Irish people. They may not do things they like; indeed, I remember when the Irish delegation came to tell us that they because Ireland was a small country—one of my colleagues, the leader of the Scottish National party, was at the meeting when they said this—it had to do what Europe wanted, whereas the UK was a big country that could argue its corner much more strongly. The protocol will make no difference to the situation in Ireland, but it is in the Bill and it changes the treaty.

Angus Robertson: Will the hon. Gentleman give way?

Michael Connarty: I certainly will, as I named the hon. Gentleman.

Angus Robertson: If the hon. Gentleman believes that Ireland does not have clout because it is a small country, can he explain why we are discussing an Irish protocol today?

Michael Connarty: The simple point is that it is because unanimity is required for an accession treaty. Clearly the concession was given to Ireland, and the concession for the Czech Republic is still being debated. However, as for what happened in the Lisbon treaty,
	I take our Irish colleagues’ word for it, because they are the people who have to live day in, day out with the consequences of what is being forced on their Government, citizens and industries by the European Union, because of the European Union’s decision on the present crisis. That is the context in which they were speaking.
	Let me return to the question of whether Croatia is fit to be a member of the European Union at this time, which has taken up a lot of the Committee’s time and was referred to by the hon. Member for North East Somerset. As he is in the party of the majority, I would have thought that he would put on record the context and the comments that were made throughout the whole process. For example, when the Minister came to us in March, he said:
	“It is important that the Commission’s Comprehensive Monitoring Report in the Autumn is able to reflect significant further progress”.
	That was the offer to us, as it were, to say that things were not going particularly well in Croatia on coming together on the aspirations we had. We talked strongly in our Committee about the need for conditionality, because Romania and Bulgaria did not accede with the conditions met. In fact, in many instances they slipped back from the original agreements once they were in. That was a point made by my hon. Friend the Member for Blackley and Broughton (Graham Stringer)—and possibly the Member behind me—who intervened to say that once a country is in the European Union, very little can be done to make it speed up. The temptation for economic advancement from the European Union is slipping away as the crisis in Europe becomes more and more of a problem; therefore, the European Union has less and less of a carrot to offer countries, and it would appear that it is not willing to use sticks in the way that might be encouraging to those countries either.
	At that time we waited for that report, which duly came to us. The report was not one to fill members of my Committee with joy and pleasure, because it was full of criticism of the Croatian position. It was quite true that some advances had been made, but the report also said, for example, that Croatia needed to
	“Complete the adoption of related by-laws, to ensure the implementation of the police law,”
	so there were problems in police law. The report said:
	“While Croatia’s preparations in the field of migration and asylum are nearly complete, the government still needs to finalise and adopt the new migration strategy,”
	adding:
	“While border police staffing targets have nearly been met and training continues, Croatia needs to achieve the established recruitment target for border police for 2012”—
	this is the autumn report for 2012 we are talking about. The report also talks about the integrated border management plan, which is vital, as the Minister admitted, because of the strange situation whereby a piece of Bosnia splits Croatia in half, so that two borders face each other with another country in the middle, which is a real faultline.
	I want to draw the attention of the House to some of the points in the final report of the Committee, for 2012-13, which was considered by the Committee on 24 October. That is the most recent document that we have, and people should take the trouble to read it. I want to highlight some of the deep concerns expressed by the Committee. Paragraph 1.82 states:
	“Addressing impunity clearly remains a major challenge, with the majority of war crimes yet to be successfully prosecuted”.
	One of the basic demands of the Balkan countries is that they co-operate fully with the International Criminal Court. It is a matter of concern that, when they come into the European Union, there would be no pressure on them to continue in the desired direction. Perhaps it is only the temptation of membership that makes them focus on this issue. The report continues goes on to state that
	“further measures are needed to facilitate the protection and attendance of witnesses.”
	A country cannot get prosecutions without witness protection, and it cannot therefore be a country that is fully co-operating with the International Criminal Court.
	I have mentioned trafficking, and I shall go into more detail in a moment. Paragraph 1.83 of the report states that the Commission has noted
	“in particular that training for judges, prosecutors and others dealing with trafficking needs to be improved, and that sentencing in this area is very low compared to other types of organised crime.”
	I recall a comment by a senior police officer in the UK, who caused a great scandal by telling a woman police inspector who tried to pursue a human trafficking case, “We don’t do human trafficking here. We do burglary and violence.” The worry is that Croatia does not see human trafficking as a major problem, but it is certainly a major problem for those who are trafficked.
	Paragraph 1.84 of the report states:
	“Tackling the scope for corruption in Croatia also still requires much work.”
	That was in October, after the matter had been considered by the Minister and his Department, and by our own senior officials who give us evidence and support in our Committee. These warnings cannot be ignored. The paragraph goes on:
	“Croatia has not efficiently implemented all legal measures to prevent conflict of interest. Local-level corruption needs attention, particularly in public procurement.”
	Corruption is an endemic problem. It comes from the former Soviet Union countries, and it must be properly addressed. Paragraph 1.85 states:
	“Croatia needs to ensure that a strong system is in place to prevent corruption in state-owned companies.”
	Again and again, we are getting strong warning signals that Croatia is not yet in a good place to enter the European Union.
	Paragraph 1.86, in reference to our call for conditionality, states that
	“the Commission is still seeking of both Bulgaria and Romania: an autonomously functioning, stable judiciary, which is able to detect and sanction conflicts of interests, corruption and organised crime and preserve the rule of law”.
	Those were conditions for Bulgaria and Romania in 2007, yet both were allowed in without meeting their conditionality provisions. We still do not believe that those conditions are being correctly met by Croatia. The Commission is also seeking
	“concrete cases of indictments, trials and convictions regarding high-level corruption and organised crime”—
	of which there is still no evidence—
	“and a legal system capable of implementing the laws in an independent and efficient way…That state has clearly not yet been attained in Croatia. It is doubtful that it will be prior to
	accession. Yet, despite the demonstrable ineffectiveness of post-accession monitoring, that now seems the only option open to the EU.”
	It is as though we are heading for the only doorway, but that doorway will not lead to reality for the people of Croatia, and we must be concerned about that. I aspire to seeing Croatia joining the EU and becoming part of the wider family of Europe. I do not have confidence, however, that when it gets in, its lifestyle and its approach to the issues that we are discussing will be better than they were before it joined the EU. The factor that is changing things is the attraction of going into the EU, but that will be lost once Croatia goes through that door.
	I want to raise the matter of human trafficking, because I think that people are blind to what is going on. I want to talk about human trafficking for slavery as well as that for prostitution and sexual abuse, which is massive. The latest figures, which I read in a pamphlet entitled “This Immoral Trade”, suggest that 27 million people are in some kind of slavery around the world. That situation is not helped by what we know is going on, through our work with the EU group, Parliamentarians Against Human Trafficking. That work is based on the work of the Human Trafficking Foundation, which is based here in London and should be commended.
	Concern has been expressed that there is trafficking from Montenegro and Bosnia into Croatia. Although the numbers involved are relatively small, this appears to show the inability of the authorities to protect the victims. There is also a question about trafficking from Turkey through Bosnia. The Human Trafficking Foundation in London has gathered quite a lot of statistics on that matter. In many places, the movement is not only into Europe but into the middle east, which illustrates a new way of targeting people for exploitation. I would like the Minister to tell us what he has been doing with the Croatian Government to make them more aware of the growing number of people being trafficked through Croatia into Europe.
	Reference has also been made to Slovenia in this regard. It has a weird situation, in that it grants 300 artistic dance visas every year. The women involved turn out to be employed in strip clubs and brothels in Europe, having come through Slovenia. That is a bogus use of such visas to help traffickers, and we wonder whether these subjects will be discussed. Will the Minister reassure us that, if Croatia comes into the EU, he will encourage it to join the organisation that I have just mentioned, Parliamentarians Against Human Trafficking? It could then join us and other European countries in trying to stop this vile trade.
	I am worried by the lack of awareness of judges in this context, and by the low tariffs being applied in cases of trafficking because of the low status afforded to the activity. We need assurances that the accession process will mean that Croatia will have to sign up to the directives on human trafficking and on the exploitation and sexual abuse of children.
	Turning to the final point in my three-part analysis, I want to know what lessons have been learned from the process. Article 49 of the treaty on the functioning of the European Union, which deals with a country applying to join the EU, states:
	“The conditions of admission and the adjustments to the Treaties on which the Union is founded, which such admission entails, shall be the subject of an agreement between the Member States and the applicant State. This agreement shall be submitted for ratification by all the contracting States in accordance with their respective constitutional requirements.”
	That is what we are doing today. When the Minister was asked about Schengen, he said that an application to join Schengen would be expected from Croatia within a couple of years, but he did not say whether there would be an obligation on it to join. I should like clarification on that point, and I imagine that colleagues from the various parties and constituencies in Scotland would as well, as this is a hot subject. Would an accession country have to join Schengen, and what would the conditions be?
	There is another question to which we have not had a clear answer. At the moment, we are torturing ourselves over various parts of the acquis communautaire and the Amsterdam treaty, including the opt-ins and opt-outs. For me, the significant thing about 2014 will not be the anniversary of some battle that took place at Bannockburn, down the road from where I used to be a councillor in Stirling. It is that we will have to decide—I believe we have to take the actual decision in 2013—whether to opt out en bloc from all the co-operation that we have set up on policing and immigration—all the things that are fundamental to the Amsterdam treaty and are part of Schengen—that give us a unified rule of law that protects all our citizens and takes on those who wish to damage their lives. In that situation, would the acquis have to be signed up to piece by piece, or could Croatia just sit there for two years and then say, “Let’s not make an application for Schengen; let us not bother; it is too much trouble. Our people will get the right to travel after four or five years in any case, without Ministers having to sign up to Schengen”? The Minister has not clarified that.
	We do not know what the conditions are. Can a country really say yes to join the EU, but not bother applying to join Schengen two years hence—or must it join Schengen? This issue is important for this country, for Croatia and for the future debates that will take place about other countries that wish to break away from one country and then reapply for membership of the EU.
	I think it is important that we get some answers in the context of Croatia. I would be deeply concerned if the Minister told me that Croatia need not apply for Schengen membership in a couple of years’ time—that it does not need to apply. The attraction is that its citizens will be able to travel, but we hear that so few of them travel in any case. Will they not bother? Will they not become part of the wider protection system that I always thought Schengen was about—throwing a ring around the European Union to protect our citizens from the lack of rule of law, and to co-operate across citizenships and across the police and other authorities.
	In the finality, I welcome Croatia coming into the European Union, but I do not do so blindly. I worry that those who drive the machine that is the European Commission want enlargement at any cost—regardless of the fact that it might bring in more problems. We have got to stop the Commission from doing this. Unfortunately, from the reports we have had from the Minister and from our Committee, it seems that we have not done well enough as yet—but I will vote for the Bill.

William Cash: I very much endorse the concluding remarks of the hon. Member for Linlithgow and East Falkirk (Michael Connarty), and I agree, too, with many of the remarks made by my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg).
	The real question is whether Croatia should become part of the European Union. I think it is a matter for Croatia. If it wants to apply, as far as I am concerned, it is that country’s affair. It also affects us, and the comments in our European Scrutiny Committee report stand on the record, so nothing further needs to be said that has not been said already. I believe, however, that if Europe enlarges and includes Croatia, it will simply be yet another example of the manner in which—as the hon. Member for Linlithgow and East Falkirk and my hon. Friend the Member for North East Somerset have said—the whole of the European Union is enlarged without regard to the impact it will have.
	I take a simple view about this issue. I believe that the European Union is, as I have said in many previous debates, at a crossroads. I think that a fundamental change is taking place within the EU, and I believe, as the vote on the EU budget indicated, that this is increasingly recognised on both sides of the House. I have also picked this up from other member states, when I go to meetings of COSAC—the Conference of Parliamentary Committees for Union Affairs of Parliaments of the European Union—as Chairman of the European Scrutiny Committee.
	Croatia will have become a member of the European Union as it now is and, no doubt, even if there were to be a fundamental shift in the relationship between ourselves and other member states, it would continue to remain a member in some shape or form of the new European Union, which I am absolutely certain is being created in people’s minds, although it has not yet got into the formalities of the arrangements.
	I do not really need to say any more at this time. I wish the people of Croatia well; actually, I wish the European Union well, too, but the truth is that the current arrangements are in need of very substantial change. I think that change is going to come and I do not think that anything can stop it. As I said to the Prime Minister the other day, the tectonic plates have moved—they are not merely moving—so the question is: what is the tsunami that will follow? The Croatian accession is something I can live with, but I believe that it will be caught up in the fundamental changes that I am certain are in the process of being achieved even as we speak.

Angus Robertson: It is always a pleasure to follow the hon. Members for Stone (Mr Cash) and for Linlithgow and East Falkirk (Michael Connarty), as we served together in the European Scrutiny Committee for over a decade. I am delighted to participate in today’s debate—first, because of a connection I have with Croatia that goes back 21 years to when I was given one of my first journalistic assignments as a new, young and keen journalist working in Vienna. I was sent down to Croatia to report from the front line of the Croatian civil war. It was a bizarre experience. Many right hon. and hon. Members will have been to Vienna—a
	splendid city. I found it remarkable that it was possible to get into a car and drive for three hours to the border crossing at Spielfeld—shortly after the Austrian army had stationed tanks to stop any incursion from the then former Yugoslavia, although Slovenia had declared independence by that stage—and then to cross the border and drive for another two hours through Zagreb and just past it to the city of Karlovac, which was the front line in the war at that stage. I was there to interview refugees and others in Croatia for a broadcast that was intended to bring home the realities of the situation in Croatia for the purposes of the largest charitable collection for refugees in the former Yugoslavia, Nachbar in Not or Neighbours in Need, which was in the process of being established.
	Let me pass on a couple of recollections. It should be borne in mind that this was only 21 years ago. I recall talking to a priest outside his church, and asking him where the front line was. He replied “Right there”, indicating the corner of the very street on which we were standing, and suggested that it would probably be a good idea for me to get off the pavement and out of the firing line. Shortly after that, I spoke to a group of women who had just arrived from just south of Karlovac, which was then occupied, after being forced to leave their homes. The fate of their husbands and children was uncertain: they did not know whether they had been taken into captivity or worse, and they were understandably beside themselves with worry.
	There I was, in my early twenties, having just driven down a motorway from a western European country into the middle of what was a circumstance of total horror for people living in Croatia. Now, only 21 years later, here we are, discussing the pros and cons—or rather just the pros, given that, as far as I am aware, no one opposes it—of allowing Croatia to join us and the other European Union member states. We have not really discussed the fact that Slovenia has been, very successfully, a member of the EU since 2004. Looking back at what has happened in both Slovenia and Croatia, which will shortly be in the EU together, is breathtaking.
	I am strongly in favour of Croatia’s membership, which has already been voted on in the European Parliament. The result there was overwhelming, and I welcome it. All four groups of which most of us are part—the European People’s party, the Social Democrats, the Liberals in the European Parliament and the Greens-European Free Alliance—voted almost unanimously in favour of Croatia’s accession.
	I want to take up some of the observations made by the hon. Member for Linlithgow and East Falkirk. There are a number of important points to be made about Croatian accession. There is still work to be done. I suggest that anyone who is interested in the subject should consult the House of Commons Library research paper 12/64, and also the recent European Scrutiny Committee report entitled “Croatia: monitoring the accession process”. All the Committee’s members have been looking closely at issues on which further progress is required, notably those relating to judiciary and fundamental rights.
	Pages 8 and 9 of the House of Commons research document deal with questions that I think should be put on the record. It states that
	“a detailed new negotiating chapter on judiciary and fundamental rights… applied… to Croatia”
	with
	“31 ‘benchmarks’ (compared with between three and six for most other chapters), covering”
	areas such as
	“judicial transparency, impartiality and efficiency; corruption and organised crime; minority and other rights; refugee return issues; and full cooperation with the ICTY”
	—the International Criminal Tribunal for the Former Yugoslavia.
	Those are all very important, but specific reforms that are still needed between now and accession, as has been pointed out by the European Commission. On 10 October, only last month, it produced findings on Croatia, pointing out that specific reforms are still needed in respect of: implementing and advancing measures set out in September 2012 for increasing the efficiency of the judiciary and reducing the court backlog—that was addressed by the Minister for Europe—and adopting the new enforcement legislation, in order to ensure the execution of court decisions and reduce the backlog of enforcement cases. The number of civil, commercial and enforcement cases outstanding in the courts has increased in 2012. The Minister made the point that a large number of cases have been dealt with, but more cases have come into the queue and that is not a good indication of the sustainability of implemented reforms.
	I have not yet heard any mention of the fact that post-accession safeguard clauses are in place. It is important to understand them, because there are many concerns about Bulgarian and Romanian membership and what has happened subsequently. That is a prism through which we must understand the position on Croatia, because the monitoring mechanisms for Bulgaria and Romania are not being replicated in relation to Croatia. However, three safeguard clauses and various transitional provisions in Croatia’s accession treaty can apply for several years after accession. They are designed to deal with difficulties that might be encountered after membership and are as follows: a general economic safeguard clause; a specific internal market safeguard clause; and specific justice and home affairs safeguard clauses. I know that the Minister is listening closely so perhaps he will help us by setting out the Government’s position on whether there is full confidence that the safeguard clauses will deliver what everybody requires from Croatia.
	It is also worth noting that queries about Croatia’s accession have also been raised in the Parliaments of other member states. Within the past month, there have been pretty outspoken commentaries from the president of Germany’s Bundestag, Norbert Lammert, the chairman of the European committee in the Bundestag, Gunther Krichbaum and the SPD’s European spokesperson, Michael Roth. They are not Europhobes—they are not anti-European in any way—but they have asked a series of questions, so it is important that we should examine the points they have made.
	We should also note that in reaction to those points other senior figures in Europe have intervened to suggest that the concerns are not everything they have been cracked up to be. Thus, European Parliament president Martin Schulz has intervened subsequent to those views being expressed from the Bundestag, and in recent weeks the European Parliament’s rapporteur on Croatian accession, Hannes Swoboda, has said that
	“new obstacles should not be created for Croatia. There are some issues which Croatia must solve, and it is feasible. Enthusiasm in Europe for Croatia's entry in mid-2013 should not wane. I am absolutely certain that Croatia will be in in mid-2013, a small portion of work remains to be done, but one should be serious and not set new obstacles”.
	That is helpful in putting into perspective where the outstanding issues lie.

Michael Connarty: Like me, the hon. Gentleman is a great enthusiast for countries that wish to take on the mantle of European Union citizenship, but is he not playing it a little light? He is quoting someone from the European establishment, which is determined to have a greater Europe that it will administer. The worry is that when Croatia comes in, its citizens will find that the people who should protect them will start to slide back and the life they hoped to have will not be realised.

Angus Robertson: The hon. Gentleman makes a good point but this is not simply about the citizens of Croatia. It is also about all other EU citizens; we are talking about the impact on other EU citizens who will be in Croatia in the future. That is why these provisions are important to citizens here and there and why I asked the Minister for Europe to clarify the point about the safeguards. I agree with the hon. Gentleman entirely and everybody—citizens of Croatia and everybody else in the EU—wants to be reassured that the uniform minimum standards will be upheld everywhere. That is, after all, the advantage of the European Union.
	Now that I have spoken about Croatia, I want to touch on the matter of the Irish protocol. I intervened to ask for clarification on the point about tax-varying powers, which are very important to the Irish Republic. It shows that as a small member state of the European Union, Ireland has been able to influence the process by seeking protocols and clarification on such important subjects. If they were unimportant, we would not be discussing them. Every single member state of the European Union is discussing in its Parliament the priorities of the Irish Government, as we are today.
	Rather than concentrating on tax, I want briefly to mention Ireland’s defence and security priorities. It is important to acknowledge that Ireland views the protocol as very important in its maintaining its peacekeeping role and traditions and we should take the opportunity to reflect on that. Why? In my 11 years in this place, I have never heard anybody pay tribute to the scale of Ireland’s contribution to the United Nations. There have been 56,000 individual missions to 54 different UN peacekeeping operations. That service has not been without cost. To date, 85 members of Irish defence forces have given their lives in the cause of world peace.
	The high standing of the Irish defence forces in UN peacekeeping is reflected in the senior positions that have been held by Irish military personnel: force commander in Cyprus; force commander on the Syria-Israel border; force commander in Lebanon; chief of staff in the United Nations; troop supervision organisation in the middle east and in Liberia; and chief military observer on the India-Pakistan border. Most recently, of course, we saw the European Union’s endeavours to deal with the genocide in and its impact on the countries neighbouring Darfur, which was commanded by Irish Lieutenant General Patrick Nash, who was the EU’s operational commander to Chad and the Central African Republic
	in 2008. In addition, an Irish general commanded the multinational task force centre in Kosovo in 2007 and defence forces officers serve in key positions in UN headquarters in New York. The importance of the protocol and Ireland’s UN commitments have been underscored by Tanaiste and Minister for Foreign Affairs Eamon Gilmore, who stressed the triple-lock of approval for international missions involving the UN, the Irish Government and Dail Eireann.
	Today we are affirming those priorities and that is a good thing. It is good to reflect on the contribution made by Ireland to the EU and the UN. It is also good to reflect on the role of smaller countries, both those in the EU and those that are joining. The Minister helpfully clarified that Croatia, a country with a population of fewer than 5 million, will join other EU member states of similar size, that is, Denmark, Finland and Slovakia. He confirmed that it will have 12 MEPs, a Commissioner —an important role, as we all know how powerful the Commission is—and seven votes in the Council of Ministers. In addition, Croat nationals will take up important EU posts, with Commission plans to hire 249 Croat officials, one of whom will serve as a director general. That is extremely beneficial for Croatia.
	Let me contrast that with the position of another European nation with a population of 5 million that is entitled to only half the Croatian entitlement of MEPs, has no right to nominate a Commissioner and has no guaranteed votes in the Council of Ministers. That nation, of course, is Scotland and I look forward to Scotland having full membership rights after the 2014 independence referendum. Unlike Croatia—perhaps I can clarify accession mechanisms in response to the intervention made by the hon. Member for Linlithgow and East Falkirk—Scotland would assume its membership from within the European Union, as recently outlined by the honorary director general of the European Commission, Graham Avery.

Michael Connarty: rose —

Angus Robertson: I shall make my point, then give the hon. Gentleman an opportunity to respond. I listened with great interest to what he said, and I am now clarifying the matter that he raised in the debate.
	In recent parliamentary evidence, Graham Avery said:
	“Scotland’s 5 million people, having been members of the EU for 40 years, have acquired rights as European citizens; for practical and political reasons, they could not—”

Lindsay Hoyle: Order. The hon. Gentleman knows as well as I do that passing reference is one thing, but we will end up in a major debate. He is not where he was when he began speaking on this subject. There was much that was great in his history of Croatia, but I do not need to hear the history of Scotland.

Angus Robertson: I am grateful, Mr Deputy Speaker. [ Interruption. ] If I can respond to Mr Deputy Speaker and say that I was pleased to be able to discuss the different ways in which nations plan to accede to the EU. It is a simple statement of fact that there is a different position for those within the EU and those who are outside it.

Wayne David: Has the hon. Gentleman received the legal advice that the Scottish First Minister has clearly not received?

Angus Robertson: rose—

Wayne David: Was the hon. Gentleman listening to what I said?

Angus Robertson: I have. I am delighted—

Lindsay Hoyle: Order. Two Members cannot be on their feet at the same time. We will end up with three of us on our feet.

Angus Robertson: If the intervention by the hon. Member for Caerphilly (Wayne David) is in order, Mr Deputy Speaker—[ Interruption. ] It is not in order, in which case I am disappointed that I will not be able to complete the answer as I would wish.

Michael Connarty: Having read the opinion—it has been given in writing, I think, to the Select Committee on Foreign Affairs—on the question of Scotland’s accession, has the hon. Gentleman read the other 13 submissions that contradict Mr Avery and do not take the same position, to say—

Lindsay Hoyle: Order. I know that Mr Robertson wants to get back on to the subject, and that no hon. Member wants to distract him. He is not a man who is easily distracted.

Angus Robertson: You are very kind, Mr Deputy Speaker. I am disappointed that the hon. Members for Linlithgow and East Falkirk and for Caerphilly (Wayne David) have been ruled out of order when trying to mention Scotland in the way that they did. However, they had an opportunity to take part in the Westminster Hall debate earlier this afternoon. Unfortunately, they were not able—

Lindsay Hoyle: Order. I have been very generous, but I am not going to be as generous now. I am sure that the hon. Gentleman wants to contribute a lot more to the debate, and we do not want to open up a debate about Westminster Hall. That is something that we are not going to do.

Angus Robertson: I shall conclude, Mr Deputy Speaker, by saying that I think that a nation of nearly 5 million— Croatia—joining the EU in 2013 is a good thing. It is good for the citizens of Croatia, and it is good for citizens in the rest of the European Union. We need to reflect on unresolved issues. Trafficking is a very serious matter, and there is a long track record in the European Scrutiny Committee of Members who care deeply about it. I commend the non-governmental organisation that the hon. Member for Linlithgow and East Falkirk cited. We need to obtain assurances on those issues. It is important not only for the citizens of Croatia and the rest of the European Union but for those people who may be trafficked in future through any EU member state, which is why I again appeal to the Minister to take the opportunity to clarify the fact that the safeguards are of the highest standards and that we can have confidence in them.
	We can look forward to Croatia’s membership. I reflect that I have not heard a single intervention today to suggest that it is a bad thing for this nation of 5 million people to take its seat at the top table in agreement with the Croatian Government. It is a gain in sovereignty for it to be able to take part directly in the EU, not just in the Council of Ministers, but with 12 MEPs in the European Parliament and a Commissioner playing an important role. That bodes well for Croatia and for the western Balkans, leading to greater confidence in peace and stability in the region. We should send a strong message to other nations, whether Bosnia and Herzegovina, Serbia or others, that the door remains open to them. We are in favour of further enlargement. Beyond the issue of Croatia, reflecting on the fact that the Irish protocol is something that the Irish Government and people thought was important, Europe has listened. The protocol and the assurances within it—

Gemma Doyle: rose —

Angus Robertson: This is my peroration. The protocol and the assurances relating to tax-varying powers are welcome, and for that reason, my right hon. and hon. Friends will support the measure as it proceeds through Parliament.

William Bain: It is always a pleasure to follow the hon. Member for Moray (Angus Robertson). I am sure that throughout the debate we will have a few flashpoints over our differences in interpretation of the treaties, and the lessons of the Bill.
	It is a testament to how far Croatia has progressed in the past nine years since it first applied for EU membership that we are being asked to approve the Bill that will ratify its likely accession to the EU as the 28th member state on 1 July 2013. Whereas 20 years ago it was recovering from the aftermath of the conflict with Serbia, the siege of Dubrovnik and the break-up of Yugoslavia, Croatia now has exciting plans to diversify its economy and invest in energy and tourism, and is cutting its deficit to under 4% of GDP, albeit in a period of somewhat patchy economic growth.
	Although members of the European Scrutiny Committee are right to point to the further progress that needs to be made on judicial reform, the elimination of corruption in state-owned companies and the detection of crime, and that more must be done to bring suspected remaining war criminals to justice, it is also fitting that we now ratify the accession treaty signed on 9 December 2011, following 18 other EU member states that have done so, or have voted to do so, since February.
	In January, some two thirds of those voting in Croatia’s referendum supported its accession to the EU as a means of embedding the rule of law and democratic values, and as a route to prosperity. There are, as hon. Members have mentioned, still some outstanding issues in connection with the ratification of the accession treaty by Slovenia, which has indicated that an agreement with Croatia over debts arising from the collapse of Ljubljanska banka in the 1990s still has to be reached.
	Croatia proceeded through the 35 chapters of accession in the period of just more than five years, prior to the Commission’s making a favourable recommendation on its membership status. The political criteria required Croatia to ensure the stability of institutions guaranteeing democracy, the rule of law, human rights and respect for, and protection of, minorities. The economic criteria require the existence of a functioning market economy, as well as the capacity to cope with competitive pressure and market forces within the EU.
	The acquis criterion refers to the ability to take on the obligations of membership arising from the treaties and the Union’s legislation—the acquis—including adherence to the aims of political, economic and monetary union, which would mean in due course Croatia adopting the euro as its currency, as under article 5 of the accession treaty it has no opt-out from participation in economic and monetary union. Indeed, no other accession state has had an opt-out, and no newly acceding or re-acceding member state would be likely to have one in future either.
	The Commission’s monitoring report from last month found real progress being made on many fronts, although further attention had to be paid to the protection rights for LGBT people, the selection of new judges and prosecutors, and rooting out corruption in public procurement. On asylum and immigration policy, Croatia shows a good level of compatibility with the EU acquis, although further progress is required on visa requirements. As a new member state that will have to sign up in due course to the Schengen acquis, further work before entry to the Union will be required with regard to the free transit agreement with Bosnia and Herzegovina.
	It is interesting to note that the record for the shortest period from application to accession in the history of the EU was Slovakia, which completed all stages within two and a half years. Croatia’s accession process, which has taken five years, compares relatively favourably with that. Of course, the example of Slovakia’s accession is a cautionary tale for all states intending to accede or re-accede that believe the process to be a mere formality. As we know from remarks by the Commission, the President of the EU Council and the FCO, that would not be the case for any state seeking accession or re-accession.
	Croatia had to make speedy progress in several areas of the accession process, demonstrating the standard that the EU expects of new aspirant member states or—dare I say it—parts of member states that decide to separate and form new entities that might seek entry to the EU. This debate is instructive, therefore, not only because of what Croatia had to do to satisfy the entry criteria or what other aspirant states, such as Serbia or Turkey, might have to do in the future, but in terms of what Scotland might have to do to become a member state if it votes for separation in 2014.
	The first area where Croatia had to make significant reforms was in relation to the creation of an independent central bank. The EU Council issued a draft common position on the progress of the access negotiations with Croatia in 2009 in which it commented extensively on the advances made in the administrative capacities and remit of Croatia’s central bank, the HNB. It noted that during the financial crisis of 2008 the bank adopted prudential measures regarding reserve requirements and foreign currency liquidity requirements. In particular, it
	reduced the reserve requirements from 17% to 14%, decreased the foreign currency liquidity ratio from 28.5% to 20% and raised banks’ maximum allowed open foreign exchange positions. The HNB has been designated by the Council as the component supervisory authority for electronic money institutions—a vital step in ensuring financial stability, which is a prerequisite of EU entry.
	The Council also accorded significant importance to the capacity of the central bank in its foreign currency liquidity requirements. Croatia has implemented regulations aligning it with the EU acquis on the new capital framework, the supervision of electronic money institutions, the winding up and reorganisation of credit institutions, the supplementary supervision of financial conglomerates and deposit guarantee schemes, and the enforcement of prudential requirements. Croatia required all this financial infrastructure before the Commission recommended that it be accepted for entry.
	Let us apply the example of Croatia to the debate on other potential aspirant countries seeking accession or re-accession. Such a state, if it did not have its own central bank, would have to rely on another sovereign country’s central bank in order to harden or relax financial rules and requirements.

Lindsay Hoyle: Order. We are drifting. I have pulled up other Members for doing the same. We need to stick to the subject in hand, rather than turning to other areas of accession.

William Bain: It does not follow from the EU’s deliberations with Croatia that Croatia’s offering another state’s central bank would have been acceptable to the EU in order to obtain the Commission’s recommendation for approval. That has intriguing lessons for future accessions and re-accessions. That is the implication of the Bill.
	Croatia, through the State Agency for Deposit Insurance and Bank Rehabilitation, can guarantee bank deposits. It made significant improvements to this scheme in anticipation of complying with EU directive 94/19/EC, which specifies that all member states must have in place a safety net for bank depositors. It cannot be a criterion, then, for future accession or re-accession countries to fail to have a system to protect bank deposits. That is the implication that comes from Croatia’s accession process and which is reflected in the Bill.
	The obvious question arises—the FCO mentioned this in a statement on Thursday—of how, if part of the EU were put into limbo, it could possibly meet the terms of such an EU directive, having no independent central bank, no machinery to guarantee bank deposits and having to rely on the central bank of another state to guarantee bank deposits. Those are all implications that come from Croatia’s accession process.
	The lessons of the negotiations for any new aspirant state highlight the following issues: does it have its own financial services regulator or would it seek to continue with the current regulatory framework, which would be conducted by another state? What would be the governance arrangements for any financial services regulator? What degree of independence from Government would that have? What institution would be prepared to stand behind financial services firms with large deposits or policy holder liabilities? Indeed, how would it be possible to provide lender of last resort facilities without assuming regulatory control over financial transactions such as
	mortgages, insurance and even pensions? All these are issues that arise out of the Bill and the accession process that Croatia went through.
	Finally, a framework to wind up failing or failed banks is required. In Croatia’s case, in chapter 9 of the 2009 common position document, the EU welcomed the alignment of Croatia’s legislation to the EU acquis with regard to bank accounts, branch accounts and the re-organisation and winding up of banks. In addition, the European Bank for Reconstruction and Development, in its 2010 to 2013 strategy for Croatia, considered the securities market regulator highly effective in pursuing complex cases. All those steps were essential in showing compliance with the EU acquis in order for Croatia’s application for membership to be accepted.
	With reference to the rights of EU citizenship being conferred on Croatians joining the EU, it is appropriate that the Bill permits a phasing in of the right to work. The Minister was right to say that the UK should make use of the flexibility that allows up to seven years before full free movement rights will apply to Croatian nationals in the UK, as was the case with the accession of Bulgaria and Romania to the EU earlier.
	The Opposition support future enlargement on the proper criteria. We note the applications made by Serbia, Montenegro and Turkey. Serbia was granted candidate status on 1 March this year, but has been advised by the EU that it can commence formal accession negotiations only if progress is made on the status of Kosovo and its future relations with Kosovo.
	The Bill is important for Croatia’s relations with the rest of the EU and the outside world. In demonstrating that a country engaged in a bloody conflict two decades ago can emerge and be in a position to join the EU now, it shows the powerful benefits of full membership of the EU—benefits that go far beyond being a member of the European Free Trade Association. Simply being a member of that institution could render a country liable to be a net contributor to the EU budget but without any influence over how it is spent, and to be bound by the rules of the single market but with no ability to shape those rules. It was interesting that we had some figures this morning from the recent past of Scottish politics advising that a separate Scottish state should, instead of seeking EU membership, seek membership of EFTA instead—

Angus Robertson: On a point of order, Mr Deputy Speaker. Would I be right in remembering your ruling to Members of the House that the debate should be about Croatia, not Scotland?

Lindsay Hoyle: That is not a point of order, but the hon. Gentleman is absolutely correct. I have mentioned to Mr Bain that I need him to come to order on Croatia. I am sure he will do that, in the same way as other Members did who drifted when we pulled them back into order. That is where Mr Bain is now going.

William Bain: Indeed, that demonstrates Croatia’s wise decision to join the EU proper rather than seeking membership only of the European Free Trade Association, given the clear advantages that will accrue to its people when it becomes a full EU member state.
	Furthermore, the Bill demonstrates precisely what states must do and the entry criteria with which they must comply before becoming members of the EU. I congratulate the people of Croatia on the progress they have made and welcome their entry next year. However, I also believe that it demonstrates the value of membership of the United Kingdom, the votes we have as a member of the EU Council and the ability to influence key decisions. That is a real benefit, and one that I and Opposition Members would not wish to see Scotland lose in coming years.

Gemma Doyle: I am grateful for the opportunity to contribute briefly to the debate—possibly more briefly than I had anticipated, given your recent ruling, Mr Deputy Speaker. Debates on the EU in this House often focus on our membership, and rightly so, but I think that it is important that, as the UK is a member state, we also engage with the wider issues, so I am pleased that we are debating Croatia’s accession.
	As my hon. Friend the shadow Europe Minister and other Members have said, we support Croatian accession and EU enlargement more widely, provided that the proper criteria are met. With every new country that joins, the single market is widened and new markets are opened up for our exports. That can only be good for business across the UK and for our economy as a whole. However, it is very important that we ensure that candidate countries are ready to join before accession. Although Bulgaria and Romania were granted conditional accession, that turned out perhaps not to be a good model, and I think it is right that it was not repeated in Croatia’s case.
	Given Croatia’s difficult not-too-distant history, and that of the wider Balkans region, I am particularly pleased that we are debating such progress and such a positive step. The EU has developed and progressed significantly since its relatively modest beginnings after the second world war, and Croatia’s accession reminds us of the power of the EU in moving on from conflict and as a mechanism for countries working together for positive aims. As we have heard, Croatia will be the second state from the former Yugoslavia to join the EU, and I very much hope that others will make progress towards membership.
	Over the past 10 years or so, I have visited Croatia and other Balkan countries a number of times, sometimes on holiday and sometimes as part of a visiting group of political representatives, both as a Member of Parliament and before I was elected. I continue to be interested in the region, its progress and the challenges it faces. Earlier this year I joined other hon. Members from both sides of the House on a visit to Bosnia. Although she is not present, I want to thank the hon. Member for Redditch (Karen Lumley) and her office for arranging what was a very informative trip, and also for her good company.
	I had previously visited Bosnia about 10 years ago, and at the time I was struck by the sense of optimism and hope for the future. I must say that I encountered quite a different and much less optimistic mood when I visited this year. I came home with renewed interest in
	what is happening in that country and a deep sense that we need to pay much more attention to Bosnia’s situation. At times, the situation in that country has seemed intractable, and I fear that it might get harder to resolve. I hope that we can support other countries in the region to move forward alongside Croatia.
	Hon. Members will be aware that this has not been an easy process for Croatia. From the creation of its Ministry of European Integration in 1998 and the submission of its formal application for membership in 2003, it appears, hopefully, that the people of Croatia will finally be granted EU membership by July 2013, ending a 15-year journey. However, there is still work to be done by the Croatian Government to ensure that they are ready to finalise accession, most notably in relation to security of the new EU border that they will control.
	I have crossed the border from Slovenia into Croatia; the Minister mentioned the border crossing, which is where the narrow strip of Bosnia juts into Croatia. I have also crossed from Croatia into Montenegro. I thought I might end up spending longer than I wanted at that crossing; as we approached from Dubrovnik, my now husband stalled the car and we went kangarooing into the checkpoint with rather a lot of noise and commotion—not really what people want to do as they approach a border checkpoint. For whatever reason, however, the officers simply checked our passports and waved us through; I assume that they thought that no one who was up to no good would make such a dramatic entrance.
	Notwithstanding the border issue, membership of the EU will make a real difference to Croatians, enshrining basic rights and principles, opening up Europe to them and signing them up to the single market. Given the history and struggles of their country, that is a significant step as it progresses into the future.
	I am conscious, Mr Deputy Speaker, of your remarks about comments concerning other countries that might accede to the EU and I know that you are aware of the ongoing debate about that issue. What is not helpful in that debate are baseless assertions from the Scottish Government that continuing seamless membership of the EU is guaranteed. That has been discredited by clear statements from the current President of the EU Commission. It will have taken Croatia 10 years to meet the criteria necessary to join the EU, from negotiating issues relating to its financial regulatory system to its external political relationship. I do not think that people in Croatia would have put up with the leaders of their country misleading the public about the legal advice on membership of the EU as we have seen the Scottish First Minister do.

Lindsay Hoyle: Order. As I have made clear, we do not want to drift. I know that the hon. Lady is making comparisons, but I am sure that the people of Croatia are not discussing Scotland, just as we will not.

Gemma Doyle: Thank you, Mr Deputy Speaker.
	A new country needs to establish itself and the appropriate institutions, and Croatia has shown how difficult that process can be. I am sure that that will be a lesson for all new states seeking to join the EU. EU
	membership is not automatic and is not easy to obtain, but after significant progress in the past 15 years, I very much support the Bill and look forward to welcoming Croatia’s accession to the EU next summer.

Wayne David: My comments will be brief and I assure you, Mr Deputy Speaker, that I will not mention Scotland.
	If we are honest with ourselves, the European Union often comes in for justifiable criticism these days, particularly on the Floor of the House. However, in many ways it has been a success story, given how the single market has developed and become successful—and will become more successful in future, I hope. It has also been successful in having been one of the contributory factors to western Europe not experiencing a war since the two we saw in the last century.
	The big exception is the Balkans, of course. I well remember the appalling loss of life that occurred in the former Yugoslavia in the 1990s and the European Union being unable or unwilling to do anything—relying on NATO and the Americans in particular to intervene to ensure peace and eventual stability in that region of Europe. If there is an eloquent testimony for the need for the European Union to work collectively to ensure that such a thing never happens again, it is the experience of the former Yugoslavia. Linked to that is the third big achievement of the European Union—its gradual increase in size, from its original six members to today’s 27, and we are looking further afield. That is a tremendous success for the European Union. It speaks volumes about how the EU is often perceived by people outside it, rather than ourselves within it, as something worth belonging to. That momentum will continue, albeit in a different way, into the future.
	I welcome the Bill. As hon. Members have said, the whole process of Croatia coming closer to the European family has been quite a long one; it has taken at least 10 years. It is important for us to recognise that lessons have been learned from the previous enlargement processes. In particular, the Minister referred to the process by which Romania and Bulgaria joined the European Union, as did Slovakia. Looking at it objectively, things could have been done better in relation to those member states, where the struggle to create a fair and open justice system still has some way to go. I think that the lessons have been learned and are reflected in how Croatia’s accession has been approached. To Croatia’s credit, many of the difficult experiences of the recent past have been confronted by apprehending and bringing to justice war criminals, and that process needs to continue. Painful though it is for some elements in the country, it is important for that process to be firmly set in stone and ongoing.
	As a major trading nation, it is important that we do everything possible to open up the Balkans to trade and to establish effective market mechanisms. Croatia has gone through quite a lot of economic difficulty over the past few years, and things are far from easy today. Nevertheless, we need to support its people as much as possible in making sure that they get over the difficulties they have experienced and complete the transition to a fully market-oriented economy, albeit one with social responsibilities.
	It is important, too, to recognise that we live in a world that is becoming increasingly integrated—we live in a global economy, as is often said—but we are also seeing the free movement of people around the globe in an unprecedented way. I well remember receiving a briefing from a chief constable in Gwent in which, when I asked him where the major source of crime in Gwent emanated from, he said that it was the Balkans. That brought the point home graphically. Although he might not have been thinking specifically of Croatia, he highlighted the fact that while we are often concerned about tackling the problems in our country, we have to be aware that many of them begin elsewhere. International crime—Members have referred to the trafficking of human beings—is clearly a case in point.
	One of the foremost concerns expressed by Members is immigration. Those concerns must be recognised. The Government have correctly said that secondary legislation will be introduced to ensure that we have an effective transition period prior to the free movement of labour, but it is worth bearing in mind that we have lessons to learn. For example, Lithuania is a relatively small country that is less populous than Croatia, and it has been estimated that the number of Lithuanians resident in the United Kingdom has increased from 14,000 to 128,000. I am not against the free movement of peoples, and I am not against Lithuanians or Croatians coming to live in this country if they have work to do and can contribute to our economy, but we must be careful to ensure that we have in place the proper infrastructure so that those people are fully integrated and the necessary facilities so that they are supported as they should be. Will the Minister provide reassurances about the anticipated number of people who will seek residence in the United Kingdom once Croatia has full EU membership and the transitional period has come to an end?
	I hope that Croatia’s accession will not be the end of the beginning of the process of enlargement, but that it will lead to future enlargement. Iceland has been mentioned, as has Turkey for many years. Unfortunately, Turkey has not made good progress recently, but it is nevertheless a key state for consideration. In the western Balkans I hope that the good example of Croatia—and Slovenia before it—will be noted by other states. As the Minister said, it is unfortunate that Bosnia and Herzegovina’s likely membership of the EU has slipped back, but we must be as encouraging as possible to ensure that it, too, has the prospect of joining the European family. Labour Members, and I hope Government Members, welcome this Bill and, with all necessary safeguards and caveats, we look forward to Croatia becoming a member of that European family.

Charles Kennedy: First, I apologise to Members on both Front Benches for arriving late to this debate; I was somewhat caught out by the change in timetabling that has taken place, and no disrespect was intended. Like my fellow Celt who spoke before me, I shall not be tempted into matters domestic in terms of Scotland, not least because of my role on behalf of the Liberal Democrats and the Better Together campaign. Indeed, I will be talking about little else for the next two years, so I consider this debate a burst of the oxygen of freedom that will not be with me for much longer.
	I have listened to your constructive admonitions, Mr Deputy Speaker, about the dangers of straying off topic. However, I cannot help recalling anecdotally that when the right hon. and learned Member for Kensington (Sir Malcolm Rifkind) occupied the office of Europe Minister in Mrs Thatcher’s Government, a rather sudden reshuffle saw George Younger become Secretary of State for Defence, and the right hon. and learned Member for Kensington be appointed Secretary of State for Scotland. The following weekend the Scottish Constitutional Convention was launched. The late, great Donald Dewar spoke as shadow Scottish Secretary, and he reflected on the ever-disputatious state of British politics, and Scottish politics in particular, as evinced on that occasion by the absence of the SNP.
	The new Secretary of State for Scotland looked around and thought of what he had been dealing with in eastern Europe and its emergent democracies, and all the turmoil, chaos and upheaval. He was now unexpectedly and suddenly appointed Secretary of State for Scotland, but he must have looked at his previous job and thought how much easier life was when he had only the rest of the world to worry about, and not Scotland. I think that will be the fate of several of us over the next couple of years.
	I want to look at this issue not just from the perspective of the House of Commons, but, together with others in the Chamber, at a wider Europe as represented in the Council of Europe—I know the hon. Member for Linlithgow and East Falkirk (Michael Connarty) will have spoken about that earlier in the debate. In welcoming Croatia’s accession in due course, it is worth bearing in mind the role that Croatia has already played as a valuable ally in continuing tough times, for us and for our other international obligations. For example, it has contributed 320 troops to the international security assistance force in Afghanistan, which speaks strongly and well. It has contributed to peacekeeping and associated activities in Libya and elsewhere in the world. It has demonstrated its internationalist credentials, and we are right to pay tribute to that today.
	The Government was recently defeated in a contentious vote in the House of Commons. It was pointed out to me that each and every Liberal Democrat MP was present and—unbelievably—all voted for the coalition, I think for the first time. We voted on the losing side; it was the reverse Midas touch that we always bring to great parliamentary occasions.
	It is worth bearing in mind the bottom line as far as Croatia is concerned. Political agreement was reached by the Council that the cost of accession to the EU should, in the current financial perspective, be met within existing headings—in other words, it should be budget neutral. At a time of such contention about the budget, it is only correct and proper that we put that agreement on the record. Although the next multi-annual financial framework—the term rolls off the tongue—has yet to be agreed, the benchmark has been set by how this accession has been handled. The UK played a role within the Council of Europe in assuring it. If Conservative Members are as worked up as they were last week, they might want to give credit where it is due, and approve of the financial implications of this accession.
	The hon. Member for Glasgow Springburn—[ Interruption. ] Is that correct?

William Bain: It is Glasgow North East.

Charles Kennedy: I was near enough. I have represented constituencies such as Ross, Skye and Inverness West, or Ross, Cromarty and Skye. Single title constituencies always have me scratching my head.
	As the hon. Member for Glasgow North East (Mr Bain) has said, the negotiations were successful. The political and social distance travelled in just a couple of decades is immense—that is not a long time, and Croatia is not far distant from us in global terms. Nevertheless, the accession negotiations were tough. Croatia was the first country to negotiate under the new chapter 23—tough new rules on judicial reform and fundamental freedoms that were introduced at European level as a result of the lessons learned from the Romanian and Bulgarian accessions.
	Therefore, the European institutions have acquitted themselves well in dealing with Croatian accession both politically and in terms of financial prudence, and according to the founding principles of Europe, which follow from the founding principles of the Council of Europe—human rights, the rule of law and democracy. We hear so much that is negative, so it is worth putting those things on the record.
	On the Irish dimension of the Bill, it is worth stressing that the protocol does not change the content or application of the treaties. Indeed, the European Council conclusions adopted in 2009 confirm that the guarantees given to the Irish, which form the subject of the protocol,
	“will clarify, but not change either the content or the application of the Treaty of Lisbon.”
	The conclusions also state that the contents
	“will in no way alter the relationship between the EU and its Member States”
	and are
	“fully compatible with the Treaty of Lisbon and will not necessitate any re-ratification of that Treaty”.
	Those who might be tempted down another diversionary line—another fault line in parliamentary politics—might wonder whether the Bill could be used to prise open the argument over the repatriation of other powers, but the answer is most definitely non, non, non. That was made crystal clear some three years ago, but it is worth underscoring in the debate.
	When the Conservatives were in power alone back in the ’80s, with very large majorities and Mrs Thatcher at the helm, the Foreign Office and Prime Minister argued in support of the enlargement of Europe. Many of us who came at the argument from an instinctively pro-European point of view believed that the Conservatives supported the widening of Europe to prevent the deepening of Europe. It was a colossal political misreading. It was not, perhaps, as colossal as Mrs Thatcher’s instinctive initial opposition to the reunification of Germany, but it was of that order—a classic Conservative misreading of the way in which Europe would develop.
	As we have seen over the 20 to 25 years since then, the widening of Europe has necessitated, in so many respects, a further deepening, resulting in a European Union, or a European Community or Common Market, as it was initially known. It began with six members, now has more than two dozen, and is likely to have many more. Common sense alone suggests that one does not have to be a constitutional lawyer to see that a deepening and a greater democratic process at the core of that deepening
	are needed if those individual component parts, the member states, as well as the overarching body itself are to function effectively. Croatia and what will follow in its slipstream in coming years, in tandem with the ongoing arguments about the fate of the single currency, mean that there will have to be further European deepening in many respects if the institutions of Europe are to serve their purpose. If the House of Commons passes this Bill, it would show that it supports that purpose, and I would welcome that.

Emma Reynolds: With the leave of the House, Mr Deputy Speaker, I want to reflect briefly on our wide-ranging debate on the Bill. Indeed, it has been so wide-ranging that at one point I wondered whether we were going to embark on a full-blown debate about the UK and its constituent parts, but we managed to avoid that.
	The hon. Member for North East Somerset (Jacob Rees-Mogg) made a characteristically long speech, while the hon. Member for Stone (Mr Cash) made an uncharacteristically short speech. My hon. Friend the Member for Linlithgow and East Falkirk (Michael Connarty) stressed the need for conditionality for new accession states and for co-operation between our Government and the Croatian Government on preventing human trafficking. The hon. Member for Moray (Angus Robertson) spoke about his time in the former Yugoslav Republic, as it then was, during the conflict and described the progress in both Slovenia and Croatia, rightly, as breathtaking. My hon. Friends the Members for Glasgow North East (Mr Bain), for West Dunbartonshire (Gemma Doyle) and for Caerphilly (Wayne David) all stressed that the Croatian experience demonstrates that the accession of new member states is by no means a straightforward process. It is lengthy and, rightly, thorough, and that should be borne in mind for future reference. Last but not least, the right hon. Member for Ross, Skye and Lochaber (Mr Kennedy) rightly put on record the contribution that Croatia is already making to the international community and to international efforts, not least the 320 troops in Afghanistan and its contribution to peace-keeping in Libya. He also stressed, importantly, the budget neutrality of Croatian accession.
	The vast majority of hon. and right hon. Members who have spoken are in favour of Croatia’s accession. It is certainly true that progress needs to be made in some areas, such as those highlighted in the recent European Commission report, but progress has been made in many other areas. For that reason, the Opposition support the Second Reading of the Bill.

David Lidington: With the leave of the House, Mr Deputy Speaker, I would like to reply briefly to some of the points that have been made. I thank Members of all parties who have taken part in the debate. Although a number of criticisms have been made of the stage that Croatia has reached in preparing for EU accession, there has been pretty nigh universal support for the principle that Croatia should be welcomed as a full member of the European Union.
	Let me deal first with the points that have been made about the Irish protocol. I was asked why no referendum was required under the European Union Act 2011. As
	my right hon. Friend the Member for Ross, Skye and Lochaber (Mr Kennedy) said just now, the truth is that the protocol is declaratory. It changes neither the content nor the application of the EU treaties. The European Council conclusions of June 2009 said that the protocol was
	“fully compatible with the Treaty of Lisbon and will not necessitate any re-ratification of that Treaty”.
	That was at the heart of the formal opinion set out by my right hon. Friend the Foreign Secretary in his statement on 2 July this year, in which he explained why, having examined the protocol, as required under the 2011 Act, he had concluded that it fell within one of the exempt categories of legislation.
	I should say to the hon. Member for Moray (Angus Robertson) that while I completely accept—and not just in respect of the Irish protocol—that the smaller EU members play a vital and welcome role in the functioning of the European Union, he will also, I am sure, have taken note of the fact that, between Croatia’s application and accession, 10 years elapsed before all the details were sorted out and accession arrangements put in place.

Nigel Dodds: Will the Minister give way?

David Lidington: The right hon. Gentleman will forgive me; I think the House would want me to make progress.
	My hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) asked about the lack of action on a police law. In about a week to eight days’ time—well ahead of the proposed Committee stage of the Bill—I will make available to the Committees and in the Library the detailed tables in respect of chapter 23, which was the supporting basis for the report, which the Committees have seen. Those tables are with the Ministry of Justice at the moment. As we did in April, we will make those tables available to the House following the Commission’s October report, and I undertake to do so in good time before the Committee stage.
	To deal with the point my hon. Friend made, progress on the police law could be said to have fallen victim to the democratic process. The previous Croatian Government, led by the HDZ, passed a law on the recruitment of police officers shortly before the Croatian general election. After a new Government were elected in Zagreb, they wanted to consider the position and decided that they wished to repeal the law. They have now had detailed discussions with the European Commission and decided to go ahead with the previous law, subject to some amendments. The details of the police law are finalised and we expect everything to be in place well ahead of Croatia’s expected accession date.
	The hon. Member for Linlithgow and East Falkirk (Michael Connarty) asked about the risks of trafficking, a subject in which he has taken a long and detailed interest. We have not identified any victims of trafficking from Croatia in the United Kingdom. Indeed, the 2011 report by the US State Department, which ranks countries in terms of their capacity to tackle trafficking and protect victims, designated Croatia as a tier 1 country, alongside the United Kingdom. The evidence suggests that Croatia already has a robust system in place, but clearly we will want to work with the Croatians to ensure that that remains the case. Countries close to
	Croatia, such as Kosovo and Albania, are indeed source countries for traffickers. The Croatian Government are fully aware of the risks and are committed to strengthening measures to tackle trafficking. For example, Croatia intends to continue training border staff and police. A training programme on trafficking in human beings has been drafted and will be implemented as part of the border police training system. We believe that Croatia is on track to meet its commitment to tackling human trafficking.
	The hon. Gentleman also asked about the need for border management. The EU monitoring reports released in April and October highlighted delays in implementing the infrastructure and equipment required for the integrated border management programme. That will be addressed as part of pre-accession monitoring, but in the meantime Croatia continues to make progress. As at August this year, the national border management information system was live at 81 border crossing points, which represents significant progress on 2011, when only 37 were so equipped. In 2011, Croatia apprehended 3,461 illegal migrants, a significant increase on the 1,946 apprehended in 2010. The total number of border officers is now 6,017, of which 4,647 are at the external border. Croatia plans to recruit 406 additional border officers before the end of the year.
	The hon. Member for Linlithgow and East Falkirk asked whether Croatia would be obliged to join Schengen. The act of accession provides for much of the Schengen acquis to apply to, and be binding on, Croatia from the date of her accession, but the actual lifting of border controls to other Schengen area member states will not take place at the time of Croatia’s accession. That will take place later, following a separate Council decision, and it will happen only if Croatia meets the requirements of the Schengen evaluation procedures to the satisfaction of the Commission and the existing Schengen area member states.
	The hon. Member for Moray asked about the post-accession measures. Articles 38 and 39, relating to safeguards to the single market and to chapters 23 and 24, can indeed be invoked after accession, as well as before it under the special pre-accession monitoring arrangements.
	In answer to a further point raised by the hon. Member for Linlithgow and East Falkirk, the conflict of interests commission is in the process of being established, and we expect it to have been established before the end of the year. One reason for the delay is that the Croatian Government have decided to be completely transparent about the process, and they have interviewed every one of the more than 200 applicants for the post involved.
	[Official Report, 12 November 2012, Vol. 553, c. 1-2MC.]I shall perhaps have an opportunity to say more about the general issue of anti-corruption measures when we reach the further stages of the Bill. Today, I would simply say that we are now seeing action being taken in high-profile cases, with convictions secured against a former Prime Minister, a former economy
	Minister and a former defence Minister. At the lower level, too, the Croatian bureau for combating corruption and organised crime has issued indictments against 257 people, secured 209 judgments including 205 convictions, and launched 191 new investigations, all between January and August 2012. Again, that is evidence of the determination of the Croatians to push forward and deliver on their promises to take rigorous measures against corruption.
	My right hon. Friend the Member for Ross, Skye and Lochaber rightly referred to the part that Croatia has played in contributing to the international security assistance force operations in Afghanistan. I also look forward to the prospect of Croatia, as a full member of the European Union, serving as a role model for the other countries of the western Balkans and, through her own diplomatic and political activity, leading them towards full integration with the European family of nations, as well as strengthening the institutions that provide for democracy, the rule of law and human rights for everybody. Although there is still work to be done in the months leading up to accession, this Government believe that Croatia has achieved remarkable progress. She is on track to deliver on her promises by the date of accession, and that is why we have brought the Bill to the House and ask the House to support it tonight.
	Question put and agreed to.
	Bill accordingly read a Second  time .

European Union (Croatian Accession and Irish Protocol) Bill (Programme)

M otion  made, and Question put forthwith (Standing Order No. 83A( 7 )),
	That the following provisions shall apply to the European Union (Croatian Accession and Irish Protocol) Bill:
	Committal
	1. The Bill shall be committed to a Committee of the whole House.
	Proceedings in Committee, on Consideration and Third Reading
	2. Proceedings in Committee, any proceedings on Consideration and proceedings on Third Reading shall be taken in one day in accordance with the following provisions of this Order.
	3. Proceedings in Committee and any proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.
	4. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.
	Programming committee
	5. Standing Order No. 83B (Programming committees) shall not apply to the proceedings on the Bill in Committee of the whole House, to any proceedings on Consideration or to proceedings on Third Reading.
	Other proceedings
	6. Any other proceedings on the Bill (including any proceedings on consideration of Lords Amendments or on any further messages from the Lords) may be programmed.—(Joseph Johnson.)
	Question agreed to.

Banking Union and Economic and Monetary Union

[Relevant document: The Fourteenth Report from the European Scrutiny Committee, on Banking Union and Economic and Monetary Union, HC 86-xiv.]

Lindsay Hoyle: I inform the House that Mr Speaker has selected the amendment in the name of Mr William Cash.

Greg Clark: I beg to move,
	That this House takes note of European Union Documents No. 13682/12, a draft Regulation amending Regulation (EC) No. 1093/2010 establishing a European Supervisory Authority (European Banking Authority) as regards its interaction with Council Regulation (EU) No…/… conferring specific tasks on the European Central 5 Bank concerning policies relating to the prudential supervision of credit institutions, No. 13683/12, a draft Regulation conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions, No. 13854/12, Commission Communication: A roadmap towards a Banking Union, and an unnumbered Explanatory Memorandum: Towards a Genuine Economic and 10 Monetary Union: Interim report; and welcomes the Government’s decision to remain outside the new supervisory arrangements while protecting the single market in financial services.
	I welcome these debates. The subject matter of today’s debate is, if anything, even more important than what we discussed last week. It is essential that proposed developments in the EU are robustly scrutinised by this Parliament. I am grateful for all the work done by the European Scrutiny Committee and its equivalent Committee in the House of Lords, as they applied their attention to the 1,100 European documents that were referred to them last year.
	One theme we will come on to is how we can strengthen the scrutiny of sovereign national Parliaments over the institutions and policies of the EU. I believe that that is essential. It is principally Members of this House and our colleagues in the other place who will search for assurance that our national interest is not being blown away by a Zeitgeist that is capable of carrying people along in the wrong direction.
	This week is a particularly appropriate one in which to recall the value of that questioning voice. It was 15 years ago on 10 November 1997 when the then Leader of the Opposition first stood out against all fashionable opinion at the time and, in a speech to the Confederation of British Industry conference, committed my party to oppose joining the proposed euro. I had a hand in preparing that speech, and I recall one of the lines that I was proud made the cut. It said:
	“if the nightmare of our experience in the ERM teaches us anything, it is not to steer by the siren voices of a supposed consensus, but to exercise the independent judgement of a cool head.”
	Of course, the two people responsible for that decision and that speech are now our Foreign Secretary and our Chancellor of the Exchequer. They were excoriated at the time for declaring on that day that they intended
	“to campaign against British membership of the single currency at the next general election”.
	I believe that this caused the brand-new Labour Government of the day to hesitate, and by missing the moment, they spared Britain from a disastrous fate.
	Fifteen years on, the documents that we are considering today are a direct consequence of the creation of the euro and, in particular, of the failure to address from the outset some of the inevitable factors. Now, as then, it is imperative that the United Kingdom exercises the independent judgment of a cool head to determine whether the new policies being proposed are consistent with the interests of our own economy.
	Let me deal first with the proposals on banking union. The first thing to say is that we and the EU need to tread particularly carefully on matters that affect financial services. The financial services industry, including banking, is not evenly distributed across all member states of the EU. The United Kingdom has a vastly greater strength in the conduct of, and international trade in, financial services than any other member state. Financial services and related areas employ more than 2 million people in this country—two thirds of them outside London—and contribute £1 out of every £8 of Government revenue. That is about £1,000 for every man, woman and child in this country.
	We have a £37 billion trade surplus in financial services and Britain accounts for 61% of the whole of the EU’s exports of financial services. Commissioner Barnier said last month:
	“It is in our general interest in Europe to have the biggest financial centre in the world. A strong City is good not only for Britain but for Europe.”
	That is a welcome recognition. We will never jeopardise an industry of such particular importance to the United Kingdom.
	In scrutinising these proposals, we need to have a clear fact in mind. People do not need banking union because they are part of a single market. The appetite for banking union arises solely because of the problems of the single currency. However, although banking union is primarily a matter for members of the eurozone, it strongly engages Britain’s interests in two ways.

Wayne David: Does the Minister honestly believe that the Prime Minister throwing a tantrum, walking out of a Council meeting and claiming that he exercised a veto when he did not is helpful to Britain’s national interests?

Greg Clark: I and, I think, the country are pleased that the Prime Minister was prepared to stand up for British interests, and I know that he will always do so. It is certainly not a matter of regret.
	I think it is desirable from the point of view of the British economy that, since the eurozone exists, it should be successful, rather than a source of economic weakness. Indeed, as the Governor of the Bank of England has said:
	“The biggest risk to the recovery”
	in this country
	“stems from the difficulties facing the euro area, our main trading partner.”
	Secondly, we need to be vigilant to ensure that our access to the single market in banking, now and in the future, is not undermined and jeopardised by the creation of a banking union. That means putting in
	place safeguards to ensure that the UK cannot be discriminated against in the future in single market decision-making processes.
	The Commission’s current proposals are not yet acceptable in that respect. For example, the European Banking Authority—which, as Members know, is the organisation that currently ensures that there is a level playing field for banking within the single market—operates on the basis not of unanimity but of majority voting. The European Central Bank regulation specifies that that the ECB would
	“coordinate and express a common position of representatives from competent authorities of the participating Member States in… the EBA”.
	That effectively requires participating member states in the euro to caucus in adopting positions and voting in the European Banking Authority.

James Clappison: I warmly welcome the approach that my right hon. Friend is taking to the whole issue, and to voting rights in particular. Are not the voting arrangements for the European Banking Authority completely unacceptable to our national interests, as he has described them, in that they will result in a banking authority that is determined by a caucus that has been arranged in advance and in which this country is deprived of its say? The Labour party may think that that is somehow in accordance with our national interests, but it most certainly is not.

Greg Clark: My hon. Friend is entirely right. I do not think that we should be shy about insisting on protecting something that is very important to us. The single market in financial services is essential, and the current proposals would compromise it.

Bernard Jenkin: I, too, welcome my right hon. Friend’s approach, but may I caution him about the double-edged invocation of the single market? We are threatened not just by the voting rights in the European Banking Authority, but by those in the Council of Ministers. It is equally possible that the member states of the eurozone that are in the banking union will caucus in the Council and use a single-market measure to create a single market in banking services to reflect the policy already adopted by the banking union. How are we to be protected from that?

Greg Clark: My hon. Friend is right to be alert to those dangers and risks. One of the clear principles on which we have insisted throughout all our negotiations on all the different dossiers is that we will accept nothing that would compromise our ability to participate in the single market.
	Let me say a bit more about our stance on the EBA. What is currently proposed would not just require but enable members of the eurozone to caucus and adopt positions, which poses the clear risk that the ECB could dominate EBA decision-making. Given that 17 of the 27 EBA members are in the eurozone, that would constitute a blocking minority on all issues decided by qualified majority voting, and indeed a qualified majority under the new Lisbon rules.
	Moreover, such action by the Commission would create an asymmetry of treatment between supervisory bodies. The proposal reflects the legal position that, as an EU institution, the ECB cannot be legally bound by EBA decisions on binding mediation, whereas the Bank of England could be. We have argued since the start of the negotiations that it would be inequitable and unacceptable if the Bank of England could be directed in that way but the ECB could not. We are pleased that our concerns are finally being acknowledged, but the asymmetry must be resolved if there is to be any final agreement.
	As is required by both the motion and the amendment tabled by the Chairman of the European Scrutiny Committee, my hon. Friend the Member for Stone (Mr Cash), we will certainly use what the amendment describes as our
	“best endeavours to ensure that the proposed changes…in the European Banking Authority are not adopted”.
	In fact, that is an uncharacteristically mild form of words from my hon. Friend. We will insist that those changes are not adopted, and we will require full protection for the position of the United Kingdom and the other non-eurozone members in the EBA.

John Baron: I am very pleased to hear what the Minister is saying, but can he tell us what concrete guarantees would exist if the Government’s proposals were adopted to ensure that the City of London’s interests could not be adversely affected by qualified majority voting by eurozone members, the ECB or anyone else on the continent? That is the key question that concerns us today.

Greg Clark: A number of mechanisms could require that, for example, the requirement for a dual majority. A number of possibilities are being discussed at the moment. What I have set out clearly is a very firm principle that we will not find ourselves in a position where we will be dominated by the ECB. That is what we are taking into the negotiations. We take a firmer view even than we are urged to do by the amendment.

William Cash: Does my right hon. Friend not accept that because this is governed by qualified majority voting, even with our best endeavours the reality is that it is not merely likely but it is as certain as we could imagine, given what we hear from other side of the European Union, that we will be outvoted? To follow on from the remarks made by my hon. Friend the Member for Basildon and Billericay (Mr Baron), what guarantee can the Minister give, in the light of the fact that this is so important for the City of London?

Greg Clark: As my hon. Friend knows, the ECB aspect of the regulation requires unanimity, and we regard both aspects of this as reinforcing each other. We have made it plain, as I am doing from the Dispatch Box today, that it is an absolute requirement that we will not be dominated by the ECB. After the Prime Minister goes to the Council he will come back to this House. If he has been able to establish agreement, he will set out what that is, and if not, he will set out why it was not possible.
	Let me deal with the second part of my hon. Friend’s amendment, where he draws attention to the need to ensure that the powers of the ECB’s governing council are not delegated to the single supervisory function in a way that is unlawful in terms of the treaties. That is a serious matter. It is vital that the weighty responsibilities that the single supervisory mechanism will discharge are vested in a way that is accepted to be legal. His observation in his amendment that it would ultimately be a matter for the European Court of Justice if there were doubts about the legality of the final arrangements is very constructive and accurate, and I hope that he will accept my assurance that our criteria in evaluating the SSM will be as in his amendment. In other words, they will be: first, that it is lawful—we reserve the right to establish that; secondly, that the integrity of the single market is respected, as I said; and, thirdly, that the UK cannot be discriminated against in the way that is proposed.

William Cash: Does my right hon. Friend recall that in relation to the fiscal compact our representative at UKRep, Sir Jon Cunliffe, wrote a letter to the Secretary-General of the European Council specifically stating that the UK Government wanted a legal reserve in respect of the illegality of that matter? On this issue, where there is clear evidence from the Council of Ministers’ legal adviser that the matter is regarded as unlawful, will my right hon. Friend guarantee that not only have we received a legal reserve, but, unlike on the previous occasion, we have followed it through with a reference to the European Court? So far, we have got a promise but no completion of it.

Greg Clark: I am grateful to my hon. Friend for that. I am not as familiar as he is with what went on in the previous exchange of correspondence, but I can say that it is essential that the arrangements need to be legal. There is no point marching up a hill of banking union if the whole thing falls apart—I mix my metaphors, but he understands what I mean. There are also other matters on which we would need to be satisfied before any of the proposed measures can be adopted.

Bernard Jenkin: My right hon. Friend made an important point when he said that the British Government would reserve their position on the legality of this new instrument and how it might be used. Will he just expand on that? Would it not be sensible for UKRep to write a letter similar to the one written in the case of the fiscal union treaty, at the very least, in order to make that clear?

Greg Clark: I do not think that there is any difference between us on this. It is essential that this arrangement is legally sound. At the moment, the negotiations are continuing and the shape of the regulation is evolving, but the sensible commitment I have given is to make sure not to proceed unless we are satisfied that it is legally robust.
	Let me talk about some of the other measures we need to bear in mind. We must make it absolutely clear that both now and in the future there should be no requirement, for example, for clearing houses that handle significant amounts of euro-denominated business to be located geographically in the eurozone, as proposed by the ECB—a proposal against which we have launched legal proceedings. That blatantly undermines the single
	market and the United Kingdom’s financial services industry. It is a poor indication of the ECB’s attitude if it intends to proceed in such a way. We need to be clear, too, that London is home to more clearing houses than any other EU capital and such proposals are unacceptable.
	As the House will see, there is some way to go before the banking union proposals are acceptable to the Government. They will not be agreed by the United Kingdom unless and until we are satisfied that the UK’s position in the single market has been secured.
	Let me turn briefly to the document known as the four presidents’ report, which was published on 12 October. It is an interim report that gives a general overview of the measures that the euro area member states might want to consider taking to improve the functioning of the euro. At this stage, there is little detail in the report apart from in the area of banking union and a great deal more discussion will be needed before there is agreement even on which issues should be explored further. The House will have a particular interest, however, in the discussion about democratic legitimacy and accountability.
	I emphasise again that although the UK will not be part of the arrangements, it seems to me to be important that when significant decisions are being taken at the eurozone level about national matters, national Parliaments should be able to scrutinise those decisions, just as the Bank of England, the UK regulatory authorities and not least Ministers are accountable to this House and the House of Lords.

Wayne David: I welcome what the Minister has just said, but does he accept that in much of the documentation we are discussing, as the European Scrutiny Committee has pointed out, preference is given to the European Parliament rather than national Parliaments as regards accountability?

Greg Clark: Indeed it is. The point I am making very clearly—perhaps not clearly enough—is that I think there should be a greater role for national Parliaments.
	The Chairman of the European Scrutiny Committee, my hon. Friend the Member for Stone, was characteristically eagle-eyed and meticulous in his regard for independence when he baulked at the line in my explanatory memorandum that stated that
	“there should be further consideration of how we can use national parliaments to enhance legitimacy and oversight.”
	He is absolutely right that “use” is not the mot juste and instead I should have said that the authority of national Parliaments should be respected. It was the very independence and rigour of his and the Committee’s scrutiny that I was commending, and anyone who labours under the misapprehension that his Committee can be used does not know him or his colleagues. I will be more exact in future.
	When the document was considered in the October Council, the Prime Minister secured an explicit commitment that the final report and road map in December must include concrete proposals to ensure that the single market’s integrity is respected. I look forward to this afternoon’s debate and tell all hon. Members who will participate that their guidance and advice will be taken seriously by the Government as the detailed
	negotiations on all these matters proceed in Brussels and across capitals in Europe over the weeks and months ahead.

Several hon. Members: rose —

Nigel Evans: Order. Before I call the shadow Minister, let me remind the House that the debate is time-limited and will end at 6.29 pm. When the shadow Minister sits down, I will announce the time limit to ensure that all Members who have indicated that they wish to speak get in.

Christopher Leslie: No pressure there, then, Mr Deputy Speaker.
	I have a lot of sympathy with the Minister today. Let us hope that he is a little luckier than he was last Wednesday, although of course the curse of Tunbridge Wells will have its way. In a way, as he explained, banking union is a natural downstream consequence of monetary union. It would be wrong to resist it for the eurozone, as the eurozone crisis has exposed a series of risks to economic stability, not least of which is the relationship between sovereign debt and banking debt and the need to find credible ways to prevent private banking losses from dragging down sovereign fiscal positions. The UK has its own banking union and our monetary policy sovereignty has given us a measure of protection during the sovereign and bank debt crises that have engulfed the eurozone.
	I thought the Minister was perhaps labouring under the impression that his plucky Members of Parliament kept us out of the euro between 1997 and 2010—that is too funny, as of course that was the decision of the previous Labour Administration. It was the right decision.

Jacob Rees-Mogg: rose —

Christopher Leslie: I will not give way yet, as I am conscious of the time.
	We were right, too, to bail out the banks in 2008, but that came at a high cost for the taxpayer and for the country’s economic prospects. UK public debt was adversely affected by the purchase of banking assets and the subsequent loss of revenues from financial services. These issues are now affecting countries around the world, especially in the EU. Monetary policy sovereignty has allowed the UK to adopt an active interest rate policy to counteract those economic headwinds—something less available to those in the eurozone.
	To save the euro, the eurozone has looked at new rules to grip the fiscal policies of its member states. Fiscal union in the EU is now widely recognised as dependent on banking union. Germany initially insisted on that, and it has asked that the single supervisory mechanism—the eurozone nation state regulators and Governments—be completed before banks can access the European stability mechanism and the European Central Bank’s outright monetary transactions programme, hence the imperative to agree these matters. In recent weeks, however, Germany is rumoured to have lost some enthusiasm for that tougher banking union and
	its consequences, especially as some of its smaller banks face major regulatory upheaval.
	It is right that the ECB’s role in supervisory policy should be triggered, by unanimity if necessary, as required in the Maastricht treaty. Central banks are increasingly in the driving seat in financial regulation, as is the case in the UK, and it is necessary for the ECB to have a clear capability in its role overseeing the operation of the eurozone. The ECB is a full treaty institution, and it must be governed by treaty rules and member state unanimity, as we heard from the Minister. In that process, the rights of non-eurozone members, particularly the UK, must be safeguarded in several ways. We should not be party to any deposit guarantee mechanisms or pre-fund recovery or resolution mechanisms. The UK has undertaken its own measures in that respect, and there are no proposals on the table that would affect our taxpayers directly.
	The rules for the single market, including a single rule book for the financial services sector in the EU, should involve all 27 member states. The European Banking Authority—as well as other European supervisory authorities—is the vehicle for preserving the integrity of the single market. The Commission says in its documentation that
	“it is proposed that voting arrangements within the EBA should be adapted to ensure EBA decision-making structures continue to be balanced and effective and preserve fully the integrity of the Single Market”.
	That is absolutely crucial, but we need more far more details about how that will work. The 17 eurozone countries will act en bloc through the ECB in their seats on the EBA, which could represent a permanent majority on all issues, as the Minister explained. The EBA has rule-making powers under qualified majority voting decisions, it mediates between supervisory institutions, and it shares supervisory best practice. There is a real risk of the ECB bloc acting as a permanent caucus to overrule the 10 non-eurozone nation states.

John Baron: What does the hon. Gentleman understand our guarantees to be to ensure that City interests are not adversely affected by QMV if the regulations go through unamended?

Christopher Leslie: As I shall come to, we should seek such key guarantees. I do not think that there is a sufficiency under the proposals on the table. As I said, I am sympathetic to the Government’s situation. However, there is a crucial difference between the Opposition and the Government. We believe that it is really important that we stay in the room somehow so that our voice continues to be heard and we can shape and mould supervisory rules, given the importance of financial services to our economy. How can we continue to be involved while not being at risk of being overridden by the 17 eurozone members? That is the conundrum with which we are trying to grapple, and it is shaping up to be a test case in the two-speed Europe debate.

James Clappison: The phrase, “Staying in the room” is one we often hear. However, is it not the reality of the voting arrangements that the hon. Gentleman would be staying in one room and the important decisions would be made in another?

Christopher Leslie: It is right for the hon. Gentleman to voice that anxiety. I do not want us to be on the margins, unable to promote the best interests for our nation and our economy. Given that our financial services sector represents approximately 40% of the total of the European Union’s financial services sector, that is absolutely at the core of our vital national interests. It is therefore imperative for us to remain an active driving force in the EU single market in financial services.

Bernard Jenkin: It seems to me that the hon. Gentleman is trying to have his cake and eat it. Either he is going to be in the room—in the banking union—or not. If he is not going to be in the banking union, the question that he is failing to grapple with is this: what safeguards and protections do we need given that we will not be in the room because we will not be in the banking union? Perhaps he could provide an answer to that question instead of just waffle.

Christopher Leslie: The hon. Gentleman is too kind, as uncharacteristic of him as that may be.
	I am afraid that this is a tall order for the Government to negotiate. It is a conundrum. I do not in any way shrink from the mountain that needs to be climbed in squaring this circle, if I may mix my metaphors in that way. I am just concerned that the Government’s approach—perhaps an echo of their approach to the EU budget—is not ambitious enough. I urge hon. Members to talk to institutions across the City of London and to financial services practitioners across the country. They are very worried about their position if they are not able to be part of a single market. They know very well that there are forums in which the rules will be made and shaped, and yet of course they want to reserve our rights from a UK position. Somehow, we have to try to forge a negotiating strategy that manages to do better.

William Cash: Will the hon. Gentleman give way?

Christopher Leslie: I will in a moment, but I am conscious of time.
	The motion expresses, in only the most general terms, the Government’s policy to
	“remain outside the new supervisory arrangements while protecting the single market in financial services.”
	That is necessary, but it is not sufficient. Perhaps it would be better if Ministers found ways to stay outside the scope of the eurozone’s rules—the point made by the hon. Member for Harwich and North Essex (Mr Jenkin)—but somehow still be in the room on EU-wide supervision matters as they develop, and to secure protections in any future settlement on EBA rule-making and mediation.

William Cash: Surely the hon. Gentleman is missing one major point, which is that the transfer of the jurisdiction under the single market arrangements that took the City of London away from the United Kingdom and gave it to the European Union was a decision taken by his Government. That is why the problem he is now having to deal with—the anxieties he referred to—has arisen. That the coalition has acquiesced in that is another story. The fact is, however, that the real responsibility lies with those who transferred the jurisdiction, as I pointed out in the Financial Times three years ago.

Christopher Leslie: I do not want to get too much into the history of these things. We could go back to the Maastricht treaty, the formation of the eurozone and the inexorable logic of how we have got to where we are today. All I know is that it is important that we try our best and redouble our efforts to ensure that we have a negotiating strategy that secures the best deal possible for the UK.

Jacob Rees-Mogg: Will the hon. Gentleman give way?

Christopher Leslie: I should like to make a little progress if I may.
	I know that hon. Members will say, “How can we manage to secure these particular arrangements? What should our stratagem be?” Government Members will recall Lady Thatcher’s invocation of the Luxembourg compromise—a quiz question for hon. Members who recall that device. It has not been in use in recent times, but it was a way, in certain circumstances for qualified majority voting arrangements, to ensure that there was a capability of promoting vital national interest. There was at one point a recognised device for ensuring that one could stay in the room. If vital national interests were affected, then certain levels of protection were possible. I do not in any way deny that that is a difficult position, but that is the sort of scale of proposition that the Government should be more actively asserting. The Government need to negotiate a clearer and more distinct set of rules that protect our status outside the eurozone while ensuring that we have an ongoing role in how new rules develop across the whole EU. In our view, that must be the Prime Minister’s negotiating objective.
	We have other concerns and questions about the SSM. How can it connect with the wider public and be subject to democratic accountability? That is an important point, because the bodies at the heart of the SSM will need to be more transparent. I am not clear whether they will publish their minutes in the same way as the Bank of England or the Federal Reserve, but we need to start addressing some of those transparency questions. Furthermore, what will be the relationship between the ECB’s monetary policy stance and its approach to decisions on financial supervision?
	The composition of the SSM is complex and lines of accountability are extremely confused. For example, the European Central Bank is a superior treaty institution, yet the EBA will in theory sit on a junior institution. It is extremely difficult to see lines of accountability and how the legal issues raised in the amendment will be resolved. What will happen in the intervening months and potentially years before this complex constitutional wiring is settled? What if new market pressures force banking crises that require the stability mechanism or outright monetary transactions to be triggered, and what if there is no SSM in place?
	How do we prevent City of London institutions and firms, which contribute about one sixth of Britain’s GDP, from changing their opinion about London in the long run as the right place to locate, when there is a risk that we will be marginalised in the decision-making forum for EU banking rules? They will worry about the prospects of operating under a different set of rules from those on the continent. Our vital national and economic interests are at stake, so we need to ensure that we keep involved, do not get pushed out and avoid being marginalised, while of course reserving our rights.

Wayne David: My hon. Friend has set out a precise and appropriate agenda for the country to pursue, but does he agree that for that agenda to be pursued effectively we need the ability to put across arguments and to persuade? What we do not want is rhetoric and empty gestures, which is what we are getting from the Government.

Christopher Leslie: I worry that that is the problem with the Government’s approach to the negotiations. I do not deny for a moment that this is a tall order as a negotiating strategy, but it is necessary to protect our national interests. Of all the 10 non-eurozone countries, we have the most at stake. As I said, 40% of the EU financial services sector comes from Britain. We cannot allow ourselves to be treated as an afterthought in these negotiations. Why are the Government letting others shape the thinking and make all the running on EU banking union reform? Our vital national interests are on the line. We need a clearer negotiation strategy from the Government from the one we have seen to date.

Several hon. Members: rose —

Nigel Evans: Order. We will start with a six-minute limit, but it will have to be lowered. I call Mr Cash to move his amendment.

William Cash: I beg to move amendment (a), in line 10, leave out from ‘and’ to end and add
	‘whilst welcoming the Government’s desire to seek safeguards for the UK, calls on the Government in respect of Regulation (EC) No. 1093/2010 to use its best endeavours to ensure that the proposed changes in the voting rights in the European Banking Authority are not adopted, to use its veto in respect of European Union Document No. 13683/12 so as to ensure that the powers of the Governing Council of the European Central Bank are not unlawfully delegated to the Single Supervisory Mechanism without an amendment of the treaties and/or to refer that matter to the European Court of Justice for adjudication of that proposal.’.
	I am deeply troubled by the wording of the motion. In my judgment, it simply does not make sense to state that the House should welcome
	“the Government’s decision to remain outside the new supervisory arrangements while protecting the single market in financial services.”
	We acquiesced in to the Lisbon treaty, the Labour party agreed to the transfer of jurisdiction over the City of London to the EU, which was wrong—the Single European Act was never remotely intended to produce such a result—and, furthermore, views I have received from the City clearly demonstrate that it does not believe that the proposals in the motion will protect the UK or a single market in financial services.
	There is another massive issue about the rule of law in Europe. The Foreign Secretary, in his speech to the Körber Foundation conference in Berlin a fortnight ago, said that what bound us together in the EU and the reason for the Government wanting to remain part of it was that it
	“has helped to spread and entrench democracy and the rule of law across Europe.”
	The tragic reality is that the EU does not subscribe to the rule of law. On 17 December 2010, Madame Lagarde said about the first bail-out fund, the European financial stability mechanism:
	“We violated all the rules because we wanted to close ranks and really rescue the euro zone.”
	Germany and France themselves broke the stability and growth pact. Furthermore, both the Government and the Attorney-General are clearly of the view that the agreement on the fiscal compact was unlawful, but in reality nothing has been done—hence my call for the legal reserve on this matter, although the legal reserve issued before has never been implemented.
	The Government know that the proposals referred to in the second part of my amendment are unlawful. The Council of Ministers’ own legal adviser, in a lengthy opinion which I have seen and which the Government cannot dispute, states that there will have to be an amendment to the treaties if the powers of the governing council of the ECB are to be delegated to the single supervisory mechanism.
	The legal opinion says on the proposal amending the EBA regulation, in effect, that in terms of the EBA’s dispute resolution powers there is no justification for treating the ECB differently from banking authorities in non-eurozone member states by exempting it from those powers. To do so would be a clear breach of the principle in law of non-discrimination.
	As to the proposal giving the ECB prudential oversight of credit institutions in the eurozone, the legal opinion states that in establishing the single supervisory mechanism the council must respect the legal framework for decision making within the ECB set by primary law—that is, the treaties. This framework does not allow the ECB’s governing council to delegate decision-making functions on banking supervision to a subsidiary body such as the SSM. There is nothing in the legal base for the SSM proposal, in article 127(6) of the treaty on the functioning of the European Union, which would permit secondary law—that is, this draft regulation—amending the rules laid down in primary law. There is no question about it and the Government know that.
	Non-eurozone member states are not entitled to participate in the ECB’s decision making, so they can have no formal decision-making role in the SSM as conceived. Furthermore, the law on banking supervision in the EU will be made up of directives to a significant extent. This is a requirement of the treaties. That means that the ECB cannot propose one-size-fits-all legislation on banking union. Rather, it can propose legislation which allows for differences in national transposition.
	We simply cannot countenance a situation in which there is a wilful breach of the rule of law and where the dysfunctional European Union vaunts the rule of law, yet deliberately breaks its own rules. This is precisely what led to the kind of constitutional crisis that we have seen in our own history when Governments from the Stuarts onwards claimed a divine right to rule but then broke the common law. This is the primrose path to constitutional disaster not only for the United Kingdom, but for Europe as a whole. I hope the House will understand my concern, as I suggested back in the 1990s that this would happen.
	I hear what the Minister says but I cannot understand why and how, given comments that I have received from the City of which I am sure he is aware. Those in the City make it clear that the single market would be put at risk by an imperfect single market in financial services in which rules differed by level of membership of the EU. Furthermore, they say:
	“It is essential that voting arrangements within the European Banking Authority are clarified so as to avoid members of the Banking Union voting together en bloc and imposing financial regulation on non-Eurozone members through qualified majority.”
	For “clarified”—

Bernard Jenkin: Will my hon. Friend give way?

William Cash: I will certainly give way once.

Bernard Jenkin: Does my hon. Friend agree that for us to invoke the single market is doubled-edged, because in the end it will be the Commission that invokes the single market as a pretext for levelling the playing field which has been unlevelled by measures taken by the Banking Union? We will therefore finish up with measures that we do not want being imposed on us by qualified majority voting.

William Cash: That is precisely right. It was never intended when we voted—and I voted at the time, with a reservation about the sovereignty of the United Kingdom Parliament, which I was not allowed to debate—that we would be in this very position. That was in 1986 when I voted for the measure, but it was with that reservation.
	To complete my point, where the comments from the City say “clarified”, I would say changed. We must change the rules, not merely clarify them, but we cannot do so because of QMV. That is the problem and it comes from the Single European Act.

John Baron: Will my hon. Friend give way?

William Cash: Just once more.

John Baron: Does my hon. Friend agree that the Government’s defence that QMV cannot be extended to decisions regarding the City cannot be right, and their defence of the idea that the ECB cannot override non-eurozone members is at least highly questionable when it comes to the legal situation that my hon. Friend is highlighting, and that therefore there is a distinct danger?

William Cash: I would go further and say that the Council’s legal adviser knows exactly what the position is, as do the whole European Union and our own Government. The opinion is out there; I have read it and it is crystal clear. The reality is that there is absolutely no question about it.
	I have great sympathy for the Minister and pay tribute to him. I will not go into the details, but it was because of him that we got the documents in the first place. He is a man of great integrity, and I think that he is in a very difficult position tonight, stuck between a rock and a hard place. I have to say that I do not believe that what he has told us really gives us the necessary guarantees and satisfaction. This is not about what we think, or about grandstanding or being difficult for its own sake; as he said at the beginning, this is in many respects—I would not say entirely—on a par with the matters on which we rebelled last week. We do not want to have to do this, but it is a matter of fact that we face this situation.
	I have another commentary from City analysts stating that the concern is that the UK could
	“still lose the ability to prevent a decision from being taken by the EBA to intervene in a UK bank directly under the EBA’s binding mediation powers.”
	They make a similar point about the need for amendments to the treaties. The truth is that it would not be right for Members of Parliament not to register their votes against these proposals in the hope—like Mr Micawber—that something would turn up, because I am afraid that what this amounts to is complicity by our own House and our Government in the violation by the EU of its own laws and the avoiding of amending the treaties for reasons of mere expediency. Even if the EU does come up with something, I believe that it will be merely a fix to avoid revealing its real intentions and, of course, the real results, which will cause so much harm to the UK and the City of London. I blame the Labour party for much of this, as I warned of it several years ago.
	The so-called remorseless logic of advocating a banking union is more of a remorseless shift away from our own national interests while the banking union moves the eurozone into an ever deeper and blacker hole with money, either invented or printed, pouring into it. That is a recipe for economic disaster.

Kelvin Hopkins: I wish to speak briefly in support of the amendment, which I have signed, and to applaud everything the hon. Member for Stone (Mr Cash) said, apart from his comments about the Labour party. I believe strongly that banking regulation should be determined by national Governments and Parliaments and that, if there are to be international agreements, they should be bilateral or multilateral agreements between Governments and not determined by the European Union.
	I am certain that my views on banking regulation are very different from those of Government Members, but I agree that we should determine what it is, not the European Union. The most damaging change for Britain was when Mrs Thatcher abandoned exchange controls in 1979, which was the most serious act taken by the Conservative Government in those years. Since then, we have seen all the crises arising from globalisation. We cannot put the genie back in the bottle, although I think that in time we might have to try, but it would take another massive crisis before that happens.
	With regard to the euro, I have always been wholly opposed to economic and monetary union and wrote my first paper about it in 1979, when I opposed the European monetary system. I wrote another paper about the exchange rate mechanism and predicted its crash, and I opposed Maastricht. I have written and spoken thousands of words on these matters over many years, and I am afraid that I have been proved right. The crisis now affecting us is quite appalling. In Greece there is now a fascist party infiltrating the police and threatening to undermine democracy while the Greek economy disappears into a black hole, and that is the result of a mad economic policy and strategy. Countries should have their own currencies and should be able to determine their own parities relative to other countries.
	The Government ought to go into the negotiating room at any time feeling strong, because the European Union needs Britain much more than we need it. We buy vastly more from the EU than it buys from us. With Germany and France now predicted to be going into recession, they will need our trade even more. Our
	exports, compared with our imports, are tiny. The German economy is heavily dependent on massive exports to Britain, so we can negotiate from a position of strength and say, “If you make life very difficult for Britain, we could make life very difficult for you as well.” We do not want to do that; we want to be comradely and internationalist. But let us not think of ourselves as a weak country, because we are very strong.

James Clappison: I warmly welcome the approach taken by my right hon. Friend the Minister for Europe and the words that he used to describe the situation. However, I support the amendment tabled by my hon. Friend the Member for Stone (Mr Cash). It is an important amendment, which complements the Government’s motion. It questions the legality of the arrangements and, in particular, the voting arrangements, which I drew attention to in an intervention.
	My right hon. Friend spoke entirely correctly—with great conviction and accuracy—about the lawfulness of the delegation of powers. The only comment that I make in addition to what my hon. Friend the Member for Stone said is that it is important, given that the EU is governed by a legal framework and is a treaty organisation, that we should have certainty when it comes to the legal provisions of those treaty arrangements. All too often we have seen not certainty but legal terms and conditions being overridden by political will. The situation that we are discussing looks very much like another case of that type, and in such cases one simply cannot trust the legal arrangements.
	On the voting arrangements set out in the regulation on the European Central Bank and their implications for the European Banking Authority, while the single supervisory mechanism in the ECB concerns the eurozone, the European Banking Authority concerns all members of the European Union and the whole single market. It sets the rulebook for the single market and has important supervisory responsibilities. The arrangements in the ECB regulation are breathtaking. It is not just a question of having the political will for nations to cohere together; it is a condition of the EU’s law—a regulation—that the member states of the eurozone work together, co-ordinate their actions and take a common position when it comes to the European Banking Authority. That means that in the European Banking Authority’s arrangements for voting, the eurozone bloc will have the whip hand in each of the decisions taken. They will be determined in advance.
	The situation is a bit like those council meetings that we sometimes see in this country in which political groups with a majority decide everything in advance in a caucus. They then go into the council to debate a decision, but everybody knows what it is going to be. The same is happening here—the European Banking Authority is being turned into a sham. All the decisions will have been taken elsewhere and in advance and we will be deprived of our say.

Martin Horwood: rose—

James Clappison: I shall give way to the hon. Gentleman if he is able to put a different complexion on the matter.

Martin Horwood: The hon. Gentleman is making an important point, but it surely only emphasises the importance of carefully negotiating the voting rights of the United Kingdom and non-eurozone members within the European Banking Authority. Does not the process advocated by the amendment—a veto and then Court adjudication, effectively—blow that negotiation out of the water and risk damaging this country’s rights within Europe?

James Clappison: The proposals are here in black and white. I hope very much that the hon. Gentleman will join us in supporting the Government to take every measure, up to and including a veto if necessary, to preserve our position and to stand up for our interests in the European Banking Authority. We simply cannot have a sham.
	It is no use pretending that by talking nicely, going into the room, being at the top table and all the rest of it is going to be the solution. We have heard those warm sentiments so many times in the past. We are discussing a matter of negotiation to protect our interests, and we have to be prepared to take decisions that are unpalatable.

Jacob Rees-Mogg: Further to the point made by our hon. Friend the Member for Cheltenham (Martin Horwood), is it not the case that every member state of the European Union, with the exception of the United Kingdom and Denmark, is obliged to join the euro at some stage? When 25 out of 27 EU members are members of the euro, they will have a majority whatever voting system is cooked up.

James Clappison: My hon. Friend pre-empts my next point. I am drawing attention to the voting arrangements laid down as a matter of European law in a regulation that gives the eurozone the whip hand, as matters stand. But of course he is absolutely right that other non-members of the eurozone have the ambition to join the euro and that, along with Denmark, we do not have to join it as a result of the opt-out.
	As my hon. Friend the Member for Harwich and North Essex (Mr Jenkin) said, even without the legal obligations we could expect members of the eurozone to cohere together to be a majority, and we can see that it will be a growing majority.

David Ruffley: If the opt-in countries and eurozone members are subject to the ECB rules but are not legally called a caucus because the ECB does not write it down as such, they will nevertheless, de facto, hunt as a pack and outvote us in the European Banking Authority, so it does not matter what the regulation says.

James Clappison: My hon. Friend is right. It is quite extraordinary to have a regulation setting out that they must act in a caucus, even though it is probably likely that they will do so anyway of their own free will; they will certainly see a common interest in it.
	This sets a very worrying precedent for the future whereby the eurozone is going in one direction in working together as a political, coherent body, and being required to do so as a matter of law. For the avoidance of any doubt, and particularly for the benefit of the hon. Member for Cheltenham (Martin Horwood), I will read
	out the provision that is in black and white—not up in the air somewhere, subject to negotiation—on page 33 of our documents. It requires member states of the eurozone:
	“To co-ordinate and express a common position of representatives from competent authorities of the participating Member States when participating in the Board of Supervisors and the Management Board of the European Banking Authority, for issues relating to the tasks conferred on the ECB by this Regulation.”
	That is European law, and if they fail to do what it says they will be breaking it—although they may, of course, choose do it anyway of their own free will.
	This is a striking illustration of the fact that the eurozone is going in one direction, seeing its political interests as a whole cohering together, while we stand in a quite different position. This provision, and the nature of the relationship that it seeks to put in place between the ECB and the EBA, should give us all a lot of food for thought, because it has major implications for our future in the European Union.

Several hon. Members: rose —

Nigel Evans: Order. The time limit has been reduced to five minutes.

Andrea Leadsom: Like all Members here, I urge the Government to consider renegotiating Britain’s relationship within the European Union as a full member but using every opportunity that presents itself to get a better deal for British taxpayers. I firmly believe that that is entirely possible and that the establishment of the European Banking Authority may give us one of the greatest opportunities yet to negotiate not just to defend British financial services but to get something back that enables us to expand our financial services activities.
	The hon. Member for Nottingham East (Chris Leslie) talked about the Luxembourg compromise, which was proposed in 1966 following General de Gaulle’s refusal to take part in European Council proceedings. It urged the EU to recognise nation states’ vital interests in particular industries. For example, the French have a veto over the common agricultural policy and the Spanish have a veto over fisheries policy. The automotive industry is as important to the Germans as financial services are to the UK, but they are able to use not only qualified majority voting but competition legislation to defend their industry, which is much less flighty than financial services. We in Britain have less protection than any other member state for this strategically vital industry which produces 1 million jobs directly within it and represents 10% of our GDP and 10% of our annual tax take.
	I applaud my hon. Friend the Member for Stone (Mr Cash) for his work on looking at the legality of European banking union, but I urge that instead of focusing on that aspect, which is a given—I do not for one moment believe that our Government would sign up to something that is illegal at EU level—we should instead focus on what we can get in return for our consent. Of course, European banking union is in all our interests; it is absolutely crucial for our economic growth because if the eurozone collapses, we are in big trouble too. Nevertheless, financial services are core to
	us as well. As the Prime Minister showed by using his veto last December, he is not afraid to stand up for this most important sector.
	I would like the Government to negotiate three things. The first is a legal safeguard for the single market so that no other eurozone caucusing can put up protectionist barriers and prevent British financial exports from being sent into the rest of the European markets. That is a basic key point. Secondly, I believe that in the culture and honour of the Luxembourg compromise, the rest of the EU needs to recognise the strategic importance of the financial industry to Britain, and give us the ability to impose an emergency break at European Banking Authority level if we believe that a proposal from the EU directly harms that industry.
	Under qualified majority voting we have an 8% vote at the EBA, yet Britain represents 36% of EU wholesale financial services markets. We are therefore greatly under-weighted in what we can do to defend our financial services sector, and I urge the Government to make that case strongly in negotiations with the rest of the EU.
	The third point is more proactive. The EU focuses its attentions on negotiating free trade agreements mainly for goods, and there is little intra-EU service trading. In spite of British UCITS—undertakings for collective investment in transferable securities—being the most successful financial export ever, that is only within the EU and not externally. The future for growth in the financial services lies in big emerging markets such as Brazil and China, and involves not Government bond trading, but basic things such as mortgages, life insurance policies, health insurance and so on. I hope the Government will urge the EU to commit—in return for our consent—to promoting free trade agreements with emerging economies in services, and specifically financial services.
	British success in financial services generated more than 1% growth in GDP per annum across all key EU member states during the financial boom. We now need to solve the financial crisis together, but Britain is in the uniquely strong position of being able to gain something back at the same time.

Brian Binley: I remember well those long-gone days when we were told that monetary union would bring strength to the EU, be enduring and serve to bring our economies together. By golly, how time does fly, and how truth changes the vision. Recent experience has shown that political ambitions exceeded economic reality, and fault lines were built into the single currency from the start. Structures have been put to the test and, quite frankly, been found wanting.
	The problems facing the euro might not have started in financial services, but the crisis has certainly highlighted those fundamental flaws. Sovereign debt might not be limited to the eurozone, but its constraints within the economic and monetary union exacerbated the crisis. Unless Europe gets to grips with those problems, the entire project could disintegrate before our very eyes. That is the situation we are facing. We are debating a desperate attempt to apply sticking plaster to a serious wound. The flaw is inherent; the mistake already made. Membership of the single currency was extended way beyond that initially envisaged, and therein lies the fault, which is not dealt with by any of the measures
	proposed today. Banking union may sound like a measured response, but the creation of a European banking union is a world away from a co-ordinated international response. President Barroso revealed his agenda in his “State of the Union” speech, raising the issue of banking union in the context of a push towards a federal European state. That is the truth of the matter.
	Our first priority must be to resist any financial transaction tax. That is not a new idea; in 1984, Sweden introduced a 0.5% tax on the purchase or sale of shares. By 1990, 30% of all Swedish equity trading had moved offshore—more than half of it to London—and the volume of bond trading had declined by 85%. That is the damage that a financial transactions tax can do to this country. It is vital that the Government have the courage to resist it.
	Will the Minister expand on the references to fiscal probity that allow for spending on social fairness? Is that a get-out clause for grossly indebted Governments who want to keep spending they do not have? It sounds very like it to me.
	The report on EMU accepts that public opinion is key, but that is another way to justify spending taxpayers’ money on propaganda. Our Government have stopped the money-go-round in local government and quangos. It would be totally inconsistent to allow Eurocrats to deploy hard-earned taxpayers’ money to propagate grand visions that have already proved to be failures.
	Earlier comments on the document made it clear that fiscal integration is about a continued movement to a federal Europe. I could quote page after page, but I will not bore the House. The truth of the matter is that we need to be sure that our Government’s promises to us are absolutely watertight, fast and hard-held. If they are not, the House will be doing a massive disservice to our children and grandchildren. That is what this measure is about.
	I noticed a slight smile on the face of the Minister when I made a point about social well-being. If he looks into it a little more, he might begin to agree with me. If I had the time, I would explain.
	Finally, as my hon. Friend the Member for South Northamptonshire (Andrea Leadsom) said, we need to take this opportunity as a base to renegotiate—

Nigel Evans: Order.

Bernard Jenkin: In some respects, this is a modest debate compared with last week’s, although it is worth reflecting that employment in the City, as reported by City AM, has collapsed by more than 100,000 since the peak of 2007. Some of that was self-inflicted, but much of it was inflicted by increased regulation. The Centre for Economic and Business Research reports that employment in the City is set to fall much lower. Most of the jobs are highly paid, high-taxpaying jobs, on which the economy in general and the economy of London and the south-east in particular depend very deeply.
	I commend the sincerity of my right hon. Friend the Minister’s approach. He is in a difficult position. The difficulties he is confronting are a microcosm of the conundrum of the UK’s place in the EU. We are not in
	the room, so we cannot function as a positively engaged member of the EU on our current terms of membership, but we are also not negotiating the alternative terms of membership that would protect us from the effects of the treaties we have already signed.
	It needs to be pointed out that banking union simply was not envisaged in the Lisbon treaty. We now find ourselves confronted with a new institution and a reform that simply was not regarded as necessary when the Lisbon treaty and its predecessors were signed. The treaty is not fit for purpose for a banking union.
	The problem is that no arrangements that nibble at those problems will protect the UK’s interests—a wholesale change in our relationship is the only way to protect them. Sadly, the motion represents the Government yet again passing up a substantial opportunity to start laying the foundations of a different relationship and to start leveraging the renegotiation of our terms of membership. That is a matter of great significance.

Andrea Leadsom: Will my hon. Friend give way?

Bernard Jenkin: I give way to my hon. Friend, who made a very able speech.

Andrea Leadsom: I am grateful to my hon. Friend, but I have to challenge him, because I think that the Government are absolutely committed to renegotiating. Why does he think that they are not?

Bernard Jenkin: Unfortunately, our party’s leadership does not intend to start substantive renegotiation of our relationship until after 2015, long after this particular opportunity will have passed us by. If we attempt to remediate this measure and its effects on our interests, we will not succeed. This is happening in case after case—the fiscal union treaty is another example.

Anne Main: Does my hon. Friend agree that we should use every opportunity and not waste any of them? We have an opportunity to make a difference. If we just keep noting everything and do not use our opportunity, that will be another chance gone and the electorate will not forgive us for it.

Bernard Jenkin: I am afraid that my hon. Friend is right that failure to get the maximum leverage out of these opportunities means that they will be forgone for ever. We may well get to 2015 and find that all the major decisions to federate the eurozone will have already been taken and our opportunities to then renegotiate will look slim and incredible.
	I will close by picking up on the contribution of my hon. Friend the Member for Stone (Mr Cash), who is the Chairman of the European Scrutiny Committee and whose comments add a Götterdämmerung-like quality to this debate. Hitherto, the architects of European integration have, like the gods in “The Ring”, attempted to construct their Valhalla on the basis of principles and the rule of law, yet they are now compromising those very principles, on which the legitimacy of this structure depends, and, in doing so, sowing the seeds of their own destruction.
	If this was being done properly—I invite the House to reflect on this—it would be a treaty change and there would be an intergovernmental conference. There would
	be a huge amount of debate about what other changes needed to flow from an intergovernmental conference and we would end up with a whole Act of Parliament, which would have to pass through both Houses of Parliament in this great building. The issue, however, is being debated in a mere 90 minutes on a quiet Tuesday afternoon before the Minister is sent—haplessly, perhaps —to the Council of Ministers to either agree or disagree with these momentous changes.
	Major changes are being made in a more casual manner as the European Union becomes more desperate to shore up its previous mistakes. “Macbeth” comes to mind: the worse a situation gets, the more rash and irrational the actors become in defence of the indefensible. I hope that hon. and right hon. Friends will remember this debate, because the move from legality to illegality is a very big step, yet that is what we are witnessing as the Government approach this particular decision. I hope yet that they will see sense and veto the proposal.

Jacob Rees-Mogg: I have a feeling that Christmas has come particularly early this year, because I had the opportunity to speak in a European debate just three hours ago, and to speak twice on Europe in one day is almost as joyful as 25 December.
	The Government have a problem and I am sympathetic to them. The report of the European Scrutiny Committee—its Chairman, my hon. Friend the Member for Stone (Mr Cash), spoke brilliantly, as always, and has tabled a sensible amendment—shows that the Government’s problem is that, of the two decisions that they face, the one that they support requires unanimity and the one that they oppose will be decided by qualified majority voting. I have quite an easy solution for them— I think they are looking for a solution—namely that they should use the threat of not supporting what they support to get leverage on the decision that they do not support. As we have heard from the Minister, there is widespread agreement across the House on the things that the Government do not support and on concerns about the European Banking Authority, particularly on voting and caucusing in the voting, and the nature of the European Central Bank, as against other central banks, in relation to the European Banking Authority.
	When it comes to caucusing, getting a particular voting arrangement in the European Banking Authority will be no good at all. It will be a temporary palliative, because unless a voting system is devised that gives the UK a permanent veto, which personally I would be all in favour of, but which seems unlikely, then as soon as other member states begin to join the euro—which they are under a treaty obligation to do, with the exception of the United Kingdom and Denmark, as I said earlier— the non-euro member states will be easily outvoted. Therefore, we need to look, with the veto we have got, at the whole system of financial regulation and how it affects the United Kingdom. I understand that total renegotiation of the treaties is not currently being considered. I appreciate that in a coalition with the Liberal Democrats—which includes my hon. Friend the Member for Cheltenham (Martin Horwood), who loves the European Union and everything that comes from it—it is difficult to get a renegotiation that would satisfy Conservatives.

Martin Horwood: Just to put the record straight for the benefit of Hansard, I do not love everything that comes out of the European Union. I simply regard it as another level of authority with which we must negotiate gently and carefully, rather than necessarily taking the rather Gaullist approach that the hon. Gentleman and his colleagues are taking today.

Jacob Rees-Mogg: I am enormously grateful to my hon. Friend, who gives me an extra minute every time.
	This is an important and good opportunity for the Government to get back powers that should never have been given away. It was a great folly to give away financial regulation to the power of the European Union, because as my hon. Friend the Member for South Northamptonshire (Andrea Leadsom) so wisely said, we have much more financial services in this country—I think she gave the figure of 36% for wholesale financial markets in the whole of the European Union that are in the UK. Therefore, we ought to regulate our own affairs and we ought not have delegated that to the European Union. We need to be careful about what is being proposed when it comes to the regulation of what are substantial international banks based in the United Kingdom in their business—which may be subsidiary business—with eurozone countries, because there is obviously a risk that they will find themselves under the auspices of a European regulator when they ought more appropriately to be under the auspices of a British regulator.
	I think the Government’s position is quite strong, and I think the amendment is extremely sensible. It is interesting that we learn only through the Financial Times that the proposals that have come forth from the Commission are illegal. We do not learn it from the Government or the Commission; we learn it from an underhand leak, which comes via a newspaper to inform our debates, which is a pity. It would be nice if we could get such information directly to a sovereign Parliament, so that we knew what was or was not legal. Perhaps the Government will consider releasing the legal advice that will guide them—or perhaps ought to guide them—in their approach to this debate.
	I would encourage the Government to accept the amendment tabled by my hon. Friend the Member for Stone. I listened very carefully to the Minister—I always do: he is a great Minister, who is much admired on this side of the House, and I imagine in other parts too. There was nothing he said which in essence contradicted my hon. Friend’s amendment, so I ended up thinking that what we were really debating was which way up an egg should be eaten—whether it should be the big side or the little side up. We are united as egg eaters in this context, and we think it would be “egg-cellent”—if I may carry on with this theme—to support my hon. Friend’s amendment, to which I was pleased to add my name, because it provides us with a solution in our negotiations in Europe and a clear way forward.

Several hon. Members: rose —

Nigel Evans: Order. I am calling the wind-up at 6.24 and we have two speakers left.

Brooks Newmark: I am delighted to follow my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg), who is perhaps one of the most articulate Members on the Government Benches. I am not going to argue the whys and wherefores of whether we should bring financial regulation back to this country. That is an important question, and I totally agree with my hon. Friend the Member for South Northamptonshire (Andrea Leadsom) on it, but I am going to argue on the narrow question before us—namely, the substantive motion and the amendment.
	As a non-eurozone member, we will not be participating in European banking unification. I agree, however, that we need to ensure that the measures taken by our European partners do not adversely affect British interests, particularly in the banking and financial services sector, given its importance to UK plc. The City of London is the pre-eminent financial services centre not only in Europe but in the world, and we want it to remain so. Remaining globally competitive is critical to the United Kingdom and to the eurozone, and it is important that the single supervisory mechanism for the eurozone should function effectively. As long as we remain outside the eurozone, the mechanism will be aimed primarily at eurozone banks and not at our own financial institutions. As many colleagues have pointed out, however, there could be unintended consequences at some future date that could have an impact on us.
	The Minister has given us assurances today that the Government will seek to secure sufficient changes to the European Banking Authority voting arrangements to protect the interests of member states, such as the UK, that are not members of the eurozone and that do not choose to enter into the proposed co-operation arrangements. I am therefore happy to support the Government’s substantive motion.
	My hon. Friend the Member for Stone (Mr Cash) has tabled an amendment to the motion. I congratulate him on his leadership of the European Scrutiny Committee and on his tenacity, perspicacity and overall determination to protect Britain’s interests. He has always been a strong defender of our interests and I congratulate him on that. In fact, I wholly endorse the opening line of his amendment, in which he welcomes
	“the Government’s desire to seek safeguards for the UK”,
	and the reasonable tone that he adopts in asking the Government to use their best endeavours. That is reasonable, and it is not didactic. I have a problem with the second part of my hon. Friend’s amendment, however, in which he calls on the Government to use their veto to
	“ensure that the powers of the Governing Council of the European Central Bank are not unlawfully delegated to the Single Supervisory Mechanism without an amendment of the treaties”.
	We have heard from the Minister’s mouth today that we will not proceed unless the arrangements are legally robust. I have had no insights into the matter, and I agree with my hon. Friend the Member for North East Somerset that it would be good to see the leaked document, but, unlike many others, I have not had the privilege of doing so. I fear, therefore, that the amendment is somewhat tautological, if not unnecessary, in that the Government would neither support an illegal arrangement nor table a motion that was not in order. I will therefore put my faith in the Minister’s assertion that there is nothing
	illegal about the proposed arrangements and that he would not waste Parliament’s time by proposing anything that was illegal. I will therefore support the Government’s motion and vote against the well meant but unnecessary amendment that my hon. Friend the Member for Stone has put before us today.

Several hon. Members: rose —

Nigel Evans: Order. I call Mr John Baron, and I ask him to sit down no later than 6.24 pm.

John Baron: Like many other Members, particularly on the Government Benches, I have a healthy respect for the Ministers sitting on the Front Bench this evening—the Financial Secretary to the Treasury, my right hon. Friend the Member for Tunbridge Wells (Greg Clark) and the Minister for Europe, my right hon. Friend the Member for Aylesbury (Mr Lidington)—but I believe that they are trying to defend the indefensible. I find it hard to understand how a Government who are prepared to use the veto, and who have used it in defence of City interests, can be prepared, by passing these regulations unamended, to enter negotiations without being able to assure the House that cast-iron guarantees are in place to ensure that qualified majority voting will not be allowed adversely to affect the City.
	I have asked the Minister at the Dispatch Box where those concrete guarantees are. Unfortunately, I have not heard anything to convince me that they actually exist. The idea that the European Central Bank would not be allowed to overrule or override non-members of the eurozone is, I am afraid, not a strong enough guarantee. I do not see where that stands up, particularly given that the legal opinion that has been sought and confirmed brings that sort of red line very much into dispute. There is no guarantee there at all. I very much look forward to hearing what the Minister has to say about what other concrete guarantees exist in defence of the City. Going into negotiations or allowing these regulations to pass without a clear idea of what the guarantees are could, I suggest, turn out to be a fool’s errand.
	We all know how the eurozone has got into this mess. The eurozone went for monetary union, courtesy of the single currency, but we all know that there cannot be monetary union without fiscal union, so now it is playing catch-up. Easy credit and easy money have led to Governments borrowing too much, and the eurozone is trying to sort out this mess.
	I have to say to the Minister, if he is listening, that having just returned from Germany with the Foreign Affairs Committee and having asked about the possible solution, I know that fiscal union or fiscal compact is definitely on the table—despite the fact that most members of the fiscal compact that is coming into effect next year have already broken the parameters of the financial limits set. The universal answer, whether one spoke to politicians of the left or the right or to trade unions, businesses or lobby groups, was more integration and more political union in order to make the fiscal compact work. We are on a collision course with the proposals that are now coming out of the eurozone.
	My suggestion is that that is fine: let the eurozone members get on with it; we wish them well in their endeavour. I doubt whether it will succeed, because the economics do not stand up and time does not allow any further exploration. Let them proceed, but my concern as they do proceed along that journey is what damage they will do to our interests. My deep concern is that, if we are not careful, we are going to walk into negotiations without having the ability to call upon cast-iron guarantees if they are needed, and that our interests will be adversely affected as a result.
	We all accept that in this country we perhaps need to rebalance the economy somewhat and to get manufacturing up. We cannot, however, ignore the importance of the City to our economy. We have been prepared to use the veto in the past, and it makes no sense for the Government’s proposals to proceed without those cast-iron guarantees in place. There is little doubt that if we enter into negotiations without those safeguards in place, we will stand a real risk of allowing others adversely to affect the City’s interests and, in the end, our prosperity as well.
	I look to hear from the Minister what those concrete guarantees are. If, as I believe, they are not forthcoming, I will have no hesitation, having put my name to the amendment of my hon. Friend the Member for Stone (Mr Cash), in supporting him in the Lobby—[Interruption.]

Nigel Evans: I am grateful to the Minister for agreeing to cut back his winding-up speech to just five minutes so that every Back Bencher who wanted to could participate in the debate.

David Lidington: I think that what has united all my hon. Friends who have spoken tonight is their justified anxiety to safeguard a vital strategic interest of the United Kingdom, namely our financial services industry. Let us never forget that most of the jobs in financial services in the United Kingdom are outside London, and that when we talk of the City we are also talking about firms that employ thousands of people in Scotland, Wales, Northern Ireland and the northern and midland cities of England.
	The City has thrived through a single market in European financial services. Roughly a third of its business is in Europe, and we should be proud of the fact that it is not just a strategic asset for the UK. The presence in London of a global financial services centre is an asset for Europe as a whole, and we should be prepared to shout loudly about that: about the millions of French workers whose savings are invested through London funds, about the energy companies throughout Europe whose exposure to dollar exchange rates is hedged by funds in London, and about the projects involving privatisation and public-private partnerships in eastern and central Europe that look to London for both expertise and capital. We are standing up for the interests of the British people and, indeed, those of citizens throughout Europe in defending the interests of the financial services sector.
	For a single market, we need a common rule book, and we need the EBA to help with the enforcement of common rules. I felt that there was a lot of common ground between the views of my hon. Friend the Member
	for South Northamptonshire (Andrea Leadsom) and the Government’s position. We do indeed believe that, in negotiating free trade arrangements with the rest of the world, the EU should ensure that services constitute one of the key dossiers, and that is what we are pressing for in every free trade agreement negotiation. I also agreed with the strictures expressed by my hon. Friend the Member for Northampton South (Mr Binley) about the financial transaction tax. We could not have made it clearer that we will not accept such a tax on a European level. If other countries are so foolish as to implement it, that is a matter for them.
	We are faced with the reality that our friends in the eurozone are committed to a single currency. We respect their decision and want that currency union to be stable, which must involve a banking union. The package of measures that we have before us groups together some elements on a single market treaty base which will be determined by qualified majority, along with, critically, a key measure which, under article 127(6) of the Lisbon treaty, requires the establishment of a single supervisory mechanism in the European Central Bank that requires unanimity. We have always seen those different elements as a package. I must tell my hon. Friend the Member for Basildon and Billericay (Mr Baron) that we could not have been clearer about the fact that we will not agree to a measure to establish the single supervisory mechanism under article 127 unless the package overall protects our interests.
	In his opening speech, my right hon. Friend the Financial Secretary said that we would insist that the proposed changes in the EBA were not acceptable, and would require full protection for the UK and the other non-eurozone members’ positions within the EBA. The documents that we have here are draft texts which do not represent the final position. If they were to represent the final position, we would not agree to them in their current form.
	I agree with my hon. Friend the Member for Braintree (Mr Newmark) that the amendment, although well intentioned, misses the point. We are not going to agree to something that is unlawful, and neither is Germany. I ask the House to have confidence in the Government’s determination to defend and advance the interests of the United Kingdom, and in particular to safeguard our financial services sector. I also ask the House to contrast that with the view of Labour’s Front-Bench team, the logic of which was not simply to be in the room, not simply to take part in negotiations, but to follow it through to join—
	One and a half hours having elapsed since the commencement of proceedings on the motion, the Deputy Speaker put the Question (Standing Order No. 16( 1 )), That the amendment be made.
	The House divided:

Ayes 33, Noes 273.

Question accordingly negatived.
	The Deputy Speaker then put the Question necessary to dispose of the business to be concluded at that time.
	Main Question agreed to.
	Resolved,
	That this House takes note of European Union Documents No. 13682/12, a draft Regulation amending Regulation (EC) No. 1093/2010 establishing a European Supervisory Authority (European Banking Authority) as regards its interaction with Council Regulation (EU) No…/… conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions, No. 13683/12, a draft Regulation conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions, No. 13854/12, Commission Communication: A roadmap towards a Banking Union, and an unnumbered Explanatory Memorandum: Towards a Genuine Economic and Monetary Union: Interim report; and welcomes the Government’s decision to remain outside the new supervisory arrangements while protecting the single market in financial services.

Business without Debate

TRUSTS (CAPITAL AND INCOME) BILL [LORDS]

Motion made, and Question put forthwith (Standing Orders Nos. 59(3) and 90( 5 )),
	That the Bill be now read a Second time.
	Question agreed to.
	Bill accordingly read a Second time; to stand committed to a Public Bill Committee (Standing Order No. 63).

TRUSTS (CAPITAL AND INCOME) BILL [LORDS]

Ordered ,
	That the Public Bill Committee to which the Trusts (Capital and Income) Bill [Lords] is committed shall have leave to sit twice on the first day on which it meets.—(Anne Milton.)

Delegated Legislation

Dawn Primarolo: For the convenience of the House we will take motions 8 to 12 together.
	Motion made, and Question put forthwith (Standing Order No. 118(6)),

Constitutional Law

That the draft Forestry Commissioners (Climate Change Functions) (Scotland) Order 2012, (Consequential Modifications) Order 2012, which was laid before this House on 10 July, be approved.

Capital Gains Tax

That the draft Double Taxation Relief and International Tax Enforcement (Bahrain) Order 2012, which was laid before this House on 16 July, be approved.
	That the draft Double Taxation Relief and International Tax Enforcement (Barbados) Order 2012, which was laid before this House on 16 July, be approved.
	That the draft Double Taxation Relief and International Tax Enforcement (Singapore) Order 2012, which was laid before this House on 16 July, be approved.
	That the draft Double Taxation Relief and International Tax Enforcement (Liechtenstein) Order 2012, which was laid before this House on 16 July, be approved.—(Anne Milton.)
	Question agreed to.
	Motion made, and Question put forthwith (Standing Order No. 118(6)),

Taxes

That the draft Double Taxation Relief and International Tax Enforcement (Switzerland) Order 2012, which was laid before this House on 16 July, be approved.—(Anne Milton.)
	Question agreed to.

Dawn Primarolo: With the leave of the House we will take motions 14 and 15 together.
	Motion made, and Question put forthwith (Standing Order No. 118(6)),

Delegated Legislation

That the Police and Crime Panels (Precepts and Chief Constable Appointments) Regulations 2012 (S.I., 2012, No. 2271), be referred to a Delegated Legislation Committee.
	That the School Premises (England) Regulations 2012 (S.I., 2012, No. 1943), be referred to a Delegated Legislation Committee.— (Anne Milton.)
	Question agreed to.

POLYCYSTIC KIDNEYS

Motion made, and Question proposed, That this House do now adjourn.—(Anne  Milton .)

Madeleine Moon: I would like to begin by declaring an interest. I am a joint chair of the all-party parliamentary kidney group. Earlier this year, the group heard a moving presentation from representatives from the Polycystic Kidney Disease charity, led by Tess Harris, its chief executive. I would also like to mention my constituent Judith French, who suffers from polycystic kidney disease. It is the testimony I have heard from those two ladies that brings me to the Chamber today.
	We have known about polycystic kidney disease since the 1500s, but in spite of such a long history, significant breakthroughs in research have been achieved only in the past 20 years. King Bathory is regarded as one of Poland’s most successful monarchs. During his short 10-year reign, he reformed the army and judicial system, and notably saw off Ivan the Terrible in 1581. Sadly, he died early because he suffered from polycystic kidney disease. His diagnosis was confirmed only 400 years after his death, when academics analysed his case.
	Since King Bathory’s reign, our ability to treat and cure a wide range of complex conditions has developed beyond what many would have thought was possible. Sadly, that progress has not been felt by those diagnosed with polycystic kidney disease, known as PKD. That is all the more surprising because it is not a rare condition. The cause is a mutation in one gene that leads it to function abnormally. The disease is characterised by the progressive enlargement of cysts in both kidneys. There are two types of PKD: autosomal dominant PKD, which affects 85% of patients, and autosomal recessive PKD. The second type is rare, affecting 1 in 20,000 live births. Tragically, newborn babies with that condition have a high mortality rate in the first month of life. Those who survive are likely to have a much reduced life expectancy. I shall focus my remarks on ADPKD.

Tracey Crouch: I congratulate the hon. Lady on securing this Adjournment debate. Does she agree that although the condition might not be rare, it is relatively unknown, and as a consequence of the lack of awareness, unfortunately mistakes can be made, for example in the assessment of the ability of people with PKD to work? I have had recent experience of such a case involving a constituent of mine.

Madeleine Moon: The hon. Lady is absolutely correct. This is a little-known condition, and the horrific nature and impediments caused by the condition as it progresses are little known and little appreciated. Often, people can look quite normal but be suffering tremendously. I commend her work in trying to raise awareness.
	For individuals with ADPKD, it is a truly disabling, painful and limiting condition. Kidneys become enlarged, leaving patients disfigured and appearing prematurely pregnant. The kidneys continue to function normally, but eating, sleeping and even breathing can be difficult because of the size of the kidney and the pain experienced. The liver can be affected, too, and many patients are
	often diagnosed with PKD and liver disease. Besides the effects on the kidneys and the liver, there is a range of other complications: heart disease, bowel problems, hernias, infections and a high risk of intracranial aneurysms.
	The kidneys can weigh up to 17 lb—upwards of 10% of a person’s body weight—and in one case a patient was recorded as having kidneys weighing 48 lb. An affected liver can grow more quickly than the kidneys, effectively squashing them. PKD affects people of working age and is characterised by premature mortality. Tragically, end-stage kidney failure is common at an average age of 55—within working age, as the hon. Member for Chatham and Aylesford (Tracey Crouch) mentioned.
	PKD affects an estimated 12.5 million people around the world and is the fourth most common cause of kidney failure. It is more common than sickle-cell anaemia, cystic fibrosis, autonomic dystrophy and Down’s syndrome combined. We simply do not know how many people are affected by PKD in the UK. On the one hand is the answer to my parliamentary question in July. The Department of Health said that a total of 1,100 hospital admissions in 2010-11 were identified as resulting from PKD, although I was informed that that might include repeat visits by the same individuals. On the other hand, PKD Charity’s own figures suggest that the number is far higher. On the basis of the number of people requiring a kidney transplant and dialysis as a result of PKD, it estimates that as many as 60,000 to 70,000 people could have the condition in the UK.

Jim Shannon: I congratulate the hon. Lady on bringing this matter to the Floor of the House. My nephew, Peter Shannon, was born with posterior urethral valves, which meant a kidney transplant for him. Had he not had one, he would be dead. Does she agree that we need a bigger push to get people to sign on to the organ transplant donor list in the interest of those with kidney diseases, and those with PKD specifically, who are currently being kept alive by dialysis treatment? Transplants are important. If Members have not signed up, they should do so and encourage others in their constituency to do the same.

Madeleine Moon: I completely endorse the hon. Gentleman’s comments. It is imperative that kidneys be available for these transplant patients. It is the most generous commitment that anyone can make.
	I am particularly grateful to Sandra Buckland and her husband for allowing me to quote directly from her remarks at the kidney group meeting. She bravely shared with us her experience of PKD, and I would like to share them with the House. Sandra’s powerful remarks underscore many of the points I want to make about what needs to be put in place to tackle this condition. Sandra was particularly brave in doing so, because she had also recently lost her sister, who died from PKD. She said:
	“I suffer from polycystic kidney and liver disease. I am married with two sons, both with polycystic kidney disease and the youngest with polycystic kidney and liver disease. My elder son has an eight-year-old daughter with PKD and my younger son, a four-year-old son with both polycystic kidney and liver disease. My father died at age 39 with heart failure due to side effects of PKD.”
	She left the group with the following question:
	“Why, when I lost my own father at 17 to this dreadful disease, are lives still being lost and progress appears to be at a standstill? If more successful research could be performed, halting the genes that allow PKD to continue, it would remove the stress, heartache and trauma for many families.”
	Sandra Buckland clearly demonstrates the cost of PKD to an individual and her family. It is a long-term, devastating diagnosis. At a national level the costs to the NHS are unknown, although an estimate is possible. The PKD charity believes the annual cost is £330 million. As I said in my opening remarks, PKD is currently incurable and can be managed only with dialysis and transplants, combined with monitoring, all of which are expensive. It was only in 1994 and 1996 that the two ADPKD genes were discovered. The ARPKD gene was characterised only in 2002.
	Funding for research is limited. In the US, $360 million has been invested in research over the past 15 years —$45 million in 2009 alone. The House will be shocked to learn that the total investment in research in the UK and the European Union is zero. The PKD charity recently funded a small biobank of PKD kidney cells at the UCL-Royal Free, and together with the US PKD foundation, it has funded one small laboratory study in Sheffield. This funding is all reliant on donations. It is telling that in the past 12 years there has been no improvement in the life expectancy or average age of renal replacement therapy of 55 years for someone diagnosed with ADPKD.
	It cannot be acceptable for PKD to remain a neglected condition in terms of research and the development of treatments. Transplants and dialysis are costly. Developing treatments would not only improve the quality of life for patients, but reduce the cost to the NHS. The PKD charity has recently begun work with the UK renal registry to develop an analysis of PKD patients on renal replacement therapy. Would the Minister consider supporting the extension of this work to include pre-dialysis patients by asking the Renal Association to develop quality standards relating to ADPKD? Would she also support changes to governance requirements that would enable the UK renal registry to collect the data, and provide the necessary funding of £500,000 for the analysis and publication of these data?
	I appreciate that £500,000 may appear a large sum, but compared with the long-term savings, it is a small investment for a huge return. Funding the registry would overcome a major barrier to understanding ADPKD, support care planning and counselling, and provide cohorts for clinical studies. The information is not available at present, so there is no foundation in place on which to build a meaningful research programme.
	New drug treatments are being developed, but getting access to them is not without its challenges. One PKD patient with polycystic liver disease contacted me to describe how she self-funded her involvement in a drugs trial in Italy over three years, travelling back and forth to Italy monthly for three years at her own cost. During the trial, her symptoms improved considerably. The trial has finished and her condition is rapidly deteriorating. Her local PCT refused to fund ongoing treatment. Her long-term survival is being determined by finances.
	Last December the Prime Minister announced a package of support for the life science sector, which included an early access scheme for seriously ill patients with limited treatment options to receive promising new drugs in
	clinical trials. This accurately describes PKD patients. Will the Minister take steps to ensure, as a matter of priority, that PKD patients are included in access to drugs in clinical trials?
	Last weekend a drugs trial in the Netherlands reported positive results in altering the progression of ADPKD. The drug will now be presented to the European Medicines Agency for licensing—
	Motion lapsed (Standing Order No. 9(3)).
	Motion made, and Question proposed, That this House do now adjourn.—(Anne  Milton .)

Madeleine Moon: The drug is not without its limitations, but it does represent progress. I ask the Minister to look at ways of supporting the trails in the UK and helping ADPKD patients to participate.
	There is also a lack of clear guidance about the management of ADPKD and ARPKD patients. Guidelines should include regular MRI scans to monitor kidney volume, which is an early predictor of later kidney loss and could guide future treatment decisions. Guidelines should also address access to genetic testing, which is particularly helpful in assessing young living related donors and for atypical or early onset cases. Only two centres will conduct those tests, and in the vast majority of cases PCTs will not fund them. Will the Minister give an undertaking to support with funding, as necessary, the development of guidelines and address the gaps?
	There is a need to develop access to specialist services, such as neurology and genetic counselling. One solution would be to establish specialised multi-disciplinary teams or clinics that could help patients be properly assessed, counselled and managed. Those teams or clinics would require a dedicated nephrologist with an interest in ADPKD, support from a specialist nurse and input from a clinical geneticist. Will the Minister work with the NHS to develop such a service?
	I have raised many issues in a short space of time. I ask the Minister to meet me and representatives of the PKD Charity at a later date to discuss the problems they face. We cannot wait another 500 years for significant progress in this field.

Anna Soubry: I congratulate the hon. Member for Bridgend (Mrs Moon) on securing the debate; I know that this is an issue she campaigns on regularly. I pay tribute not only to her work, but to the excellent work of the Polycystic Kidney Disease Charity right across the UK in raising awareness of the condition and supporting those with it. I am of course more than willing to meet her and the charity and look forward to doing so. I think it will be a very worthwhile meeting.
	I will do all I can to answer the hon. Lady’s many question and deal with her requests, and not only in my remarks this evening, because, as she knows, I will not be able to respond to everything tonight. It might well be that a letter can deal with her questions, so I will certainly take away all she has said. I hope to give her some assurance about the work that is being done. As I know she understands, I can respond only as the Minister
	responsible in England, because health is a devolved matter. I am confident that she will raise these matters with the Welsh Assembly.
	The Welsh Assembly Government—we have made inquiries—published in April 2007 a national service framework and policy statement, “Designed to Tackle Renal Disease in Wales”. Improving the quality of care for people with renal disease, or at least at risk from it, is the cornerstone of that policy statement and of the national service framework—the NSF.
	In 2008, the Welsh Assembly Government issued a further three-year strategic framework, for 2008 to 2011, setting out the key interventions required of the NHS in Wales in implementing NSF standards. In England, we have successfully introduced a number of programmes to change outcomes for people with kidney disease. For example, we have introduced into the quality outcomes frameworks—known as QOF—the identification and management of chronic kidney disease and the inclusion of chronic kidney disease in the NHS health checks programme. Having raised awareness of chronic kidney disease in primary care, we now have 2.3 million people on primary care registers in England, but we want to do still more.
	The NHS health checks programme is being rolled out across England this year and next. The programme invites everyone between the ages of 45 and 74 to a vascular health check. It is estimated that up to 20,000 cases of diabetes and kidney disease will be detected earlier every year. Such early identification is key to the better management of people with these conditions and ensuring they receive optimum treatment and improved outcomes.
	On the particular issues raised about polycystic kidney disease, unfortunately, as the hon. Lady mentioned, PKD is not preventable; it is a genetic disorder. I pay tribute to how she has relied on the various experiences of her constituents and others connected with her work to explain with great compassion and care how the disease affects so many people and to set out its awful nature.
	I am pleased to hear that international studies are currently under way, three of which are being hosted by the National Institute for Health Research, looking at the viability of new drug therapy and disease management to give improved quality of life for those with PKD. I very much heard the hon. Lady’s comments about clinical drug trials and the gathering of data. As she said, the £50,000 cost seems large, but it may be argued that in the overall sum of things it seems like a drop in the ocean, although of course I cannot make any promises. I am sure that somebody somewhere will take that on board and we will explore the matter more when we meet.
	The hon. Lady asked for increased access to radiological and ultrasound scanning, and rightly so, and I would welcome the development of guidelines about best practice in that area. I know that a quality standard for chronic kidney disease was published last year by the National Institute for Health and Clinical Excellence. That sets out what high-quality, cost-effective care looks like so that commissioners and providers can assess standards of care and target improvement efforts where they are most needed.
	The NICE quality standard clearly states that patients with a genetic family history of PKD over 20 years of age should be referred to secondary specialist care. Chronic kidney disease, or CKD, is associated with reduced quality of life. Quality of life varies depending on the disease stage, medical management and the presence of co-morbidities and complications. It is crucial, therefore, that those diagnosed with PKD have access to specialist care to help them deal with this long-term condition and to support them and their families emotionally. As we have heard, it is a genetic disorder.

Tracey Crouch: The Minister will have heard from my intervention that a constituent of mine suffers from polycystic kidneys. He was recently assessed under the Work programme as fit for work despite suffering from that horrific condition. The decision has been reversed, as there is now proper understanding of the condition and its impact on his ability to work. However, will the Minister work with the Department for Work and Pensions in issuing guidance so that unnecessary pressure is not put on people suffering from this debilitating disease during assessments?

Anna Soubry: I thank my hon. Friend for that helpful intervention; as ever, she makes a good case. I will take the issue up and explore it further. If she will be good enough to put her points in a letter, that will help me in my consultations and discussions with the Department for Work and Pensions.
	We estimate that up to one in 1,000 of the population has PKD globally. Based on that estimate, more than 60,000 people in the UK are at risk of developing PKD. However, we do not currently collate centrally the numbers of people with PKD in England, a point raised by the hon. Member for Bridgend. I will ask the national clinical director for kidney disease to see what further action can be taken accurately to determine national incidence in England.
	If the hon. Lady is good enough to make the same representations to the Welsh Assembly and indeed the Scottish Assembly, we will have a far better picture of the situation throughout the United Kingdom. [Interruption.] I should also include Northern Ireland, of course, as the hon. Member for Strangford (Jim Shannon) is urging me to do. Looking at the care received by people with polycystic kidney disease, most patients are seen in general renal clinics, and they may receive little or no genetic counselling or specific disease management advice, or a thorough needs assessment. I am aware that in the early stages there may be no symptoms, and sometimes the cysts may not be noticed until adulthood or through family screening. However, some children present early with symptoms that can be confused with another form of PKD called, as the hon. Lady said, autosomal recessive PKD. The common symptoms will vary by individual and may include back or abdominal pain, recurrent urinary infections or blood in the urine, kidney stones, and kidney failure.
	People with polycystic kidney disease can require special consideration for dialysis and transplantation due to the nature of their disease and size of the cysts. I welcome all the comments made by the hon. Member for Strangford about transplants and donors and the urgent need to make sure that more people donate their kidneys—indeed, all their organs.

Glyn Davies: Does the Minister agree that we have a duty as parliamentarians to do everything in our power to increase the level of organ donation? Does she also agree that we should implement every recommendation of the organ donation taskforce? It is working very well, but we need to move quickly to maximise the number of organs available.

Anna Soubry: I absolutely agree with everything that my hon. Friend says. I was horrified to discover in a recent meeting that unfortunately in England we are not making the progress on organ donation that we should. It is a serious problem. We know that so many lives can be saved or seriously improved if people are good enough to indicate that they are willing, on their death, for their organs to be donated.
	Let me go further and say this: of course I understand why, when somebody dies, the family struggle in their bereavement to give permission to allow the loved one’s organs to be donated. However, I urge people to do so, even in those very difficult situations. It is a most wonderful way to create a real legacy by enabling somebody literally to live on through someone else. If more people could, in those dark moments, see that, it would make a profound difference to improving, and indeed prolonging, lives.

Jim Shannon: I thank the Minister for her pertinent words about transplants. I understand that when people renew their driving licence there is a box they can tick if they want to be on a donor register for the rest of their life. It is a painless exercise that commits them for ever and provides the authority for all their bodily items to be transplanted. Given that it is so easy to tick that box, perhaps more of those who are renewing their licence should do so to say, “Yes, I want to be a donor.”

Anna Soubry: The ability to do that is a golden opportunity for people, and I wish they would take it. One of the problems, though, is that someone applying for a licence will think, “Well, I’m applying for a driving licence and I can’t deal with all that now; I’ll come back to it another day”, and unfortunately they do not return to it having got their driving licence.
	I would very much welcome a serious look at how we can solve this problem by campaigning harder to ask people to tick the box, make their views known, and speak to their families. Each and every one of us should talk among our families about the things that we want on our death. I know that these are difficult subjects, but this is, as we all know, a wonderful legacy that people can leave which makes a huge difference to the quality and length of the lives that people could lead.
	As provision could be improved with the introduction of evidence-based best practice guidance both at diagnosis and for the management of people with polycystic kidney disease, I will ask my officials to raise this with the appropriate agencies to see what further actions can be taken.
	I pay tribute to the hon. Lady and all those who have contributed to this debate, and thank them for drawing attention to this specific and important disease area. I also congratulate those at PKD Charity on all their hard work. I look forward to meeting them and the hon. Lady to make sure that we raise the profile of polycystic kidney disease.
	Question put and agreed to.
	House adjourned.